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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 001-31451
 BEARINGPOINT, INC.
 (Exact name of Registrant as specified in its charter)
 DELAWARE
    
    22-3680505(State or other jurisdiction of
    
    (IRS Employerincorporation or organization)
    
    Identification No.)100 Crescent Court, Suite 700, Dallas, TX
    
    75201(Address of principal executive offices)
    
    (Zip Code)
 (703) 747-3000
(Registrants telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the Act: None
 Securities registered pursuant to Section 12(g) of the Act:
 Common Stock, $.01 Par Value
(Title of class)
 Series A Junior Participating Preferred Stock Purchase Rights
(Title of class)
 o þ
 o þ
 o þ
 þ
 o þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
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TABLE OF CONTENTS
 PageDescription
    
    NumberPART I.Item 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    6Item 1B.
    
    Unresolved Staff Comments
    
    
    11Item 2.
    
    Properties
    
    
    11Item 3.
    
    Legal Proceedings
    
    
    12Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    14PART II.Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
    
    
    15Item 6.
    
    Selected Financial Data
    
    
    18Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    
    20Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    47Item 8.
    
    Financial Statements and Supplementary Data
    
    
    48Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    48Item 9A.
    
    Controls and Procedures
    
    
    49Item 9B.
    
    Other Information
    
    
    51PART III.Item 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    52Item 11.
    
    Executive Compensation
    
    
    55Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    74Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    77Item 14.
    
    Principal Accounting Fees and Services
    
    
    78PART IV.Item 15.
    
    Exhibits, Financial Statement Schedules
    
    
    79EX-10.24EX-10.34EX-10.35EX-10.36EX-10.40EX-10.41EX-10.46EX-10.47EX-10.49EX-10.50EX-10.54EX-10.56EX-10.58EX-10.68EX-10.70EX-10.78EX-10.92EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2




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PART I.
 FORWARD-LOOKING STATEMENTS
  AVAILABLE INFORMATION
  www.bearingpoint.com.
    
 ITEM 1. BUSINESS
 General
  1




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Chapter 11
Bankruptcy Proceedings and Sale Transactions
 In re BearingPoint, Inc., et al.
    2




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
    
    New Senior Secured Credit Facility.  The 2007 Credit Facility would be replaced with
a new senior secured credit facility as follows: term loan in the amount of $272 million
plus accrued interest and a synthetic letter of credit facility in the amount of up to
$130 million; plus the issuance of new convertible preferred stock with a liquidation
preference of $50 million, plus accrued and unpaid dividends, which would be convertible
into class 3 common stock (as described below).
    
    Unsecured Debt.  All unsecured debt would be exchanged for three different classes of
common stock. Holders of the 5.00% Convertible Senior Debentures and holders of the $40
million 0.50% Convertible Senior Subordinated Debentures due 2010 would receive shares
of class 1 common stock. Holders of the $250 million 2.50% Series A Convertible
Subordinated Debentures due 2024 and holders of the $200 million 2.75% Series B
Convertible Subordinated Debentures due 2024 would receive shares of class 2 common
stock. Certain general unsecured creditors would receive shares of class 3 common
stock. The three classes of common stock would be entitled to the same dividends,
distributions and voting rights, except that until the holders of class 1 common stock
had received dividends and distributions of $240 million, such holders would be entitled
to the dividend, distribution and voting rights (except with respect to the election of
directors) of the holders of class 2 common stock.
    
    Existing Equity.All existing equity in the Company would be cancelled for no
consideration.
      3




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www.bearingpoint.com
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Going Concern
  North American Industry Groups
   
    
    Public Services,serving a broad range of both public and private clients, including
agencies of the U.S. Federal government such as the Departments of Defense, Homeland
Security, and Health and Human Services; provincial, state and local governments; public
healthcare companies and private sector healthcare agencies; aerospace and defense
companies; and higher education clients. As described above, the closing of the sale of a
significant portion of our assets related to our North American Public Services business
pursuant to the Deloitte Transaction occurred on May 8, 2009.
    
    Commercial Services,supporting a highly diversified range of clients, including those in
the life sciences and energy markets, as well as technology, consumer markets,
manufacturing, transportation, communications and private and public utilities. As described
above, we have entered into an agreement to sell a substantial portion of our assets related
to our Commercial Services business pursuant to the PwC Commercial Services Transaction.
    
    Financial Services,directing its solutions to many of the worlds leading banking,
insurance, securities, real estate, hospitality and professional services institutions. As
described above, we have entered into an agreement to sell a substantial portion of our
assets related to our Financial Services business pursuant to the PwC Commercial Services
Transaction.
 International Operations
   
    
    EMEA.As noted above, the Board of Directors of the Company authorized the Company to
enter into a non-binding term sheet for the sale of its EMEA business to local management.
    
    Asia Pacific.As described above, the closing of the sale of our consulting business in
Japan pursuant to the PwC Japan Transactions occurred on May 11, 2009.Pursuant to the PWC China/India Transaction, we have entered into agreements to sell two global
development centers in the Asia Pacific region. We are also in separate negotiations with
other parties and local management to sell various other Asia Pacific practices.
    
    Latin America.As noted above, we are in negotiations with other parties and local
management to sell our Latin America practices.
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Our Joint Marketing Relationships
  Competition
   Intellectual Property
  Customer Dependence
  Employees
  
 ITEM 1A. RISK FACTORS
 You should carefully consider the risks described below before making an investment decision
regarding our securities. The risks described below are not the only ones facing us. Additional
risks not presently known to us or that we currently deem immaterial may also adversely affect our
business or operations. Our business, financial condition or results of operations, cash flows or
prospects could be materially and adversely affected by the occurrence of any of the matters
included in these risks.
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Risks that Relate to Our Bankruptcy and the Sale Transactions
 We are pursuing the sale of all or substantially all of our businesses pursuant to the Sale
Transactions, which will result in the liquidation of our business and the Company ceasing to
operate as a going concern.
   We are subject to the risks and uncertainties associated with bankruptcy proceedings as a
result of our filing for reorganization under chapter 11 of the Bankruptcy Code on February 18,
2009.
   
    
    the relationships between us and our customers, employees, vendors, strategic partners
and others may be negatively affected by the Chapter 11 Cases and the Sale Transactions,
including risks that our customers will be less likely to purchase our services, that our
employees will seek out other opportunities or lack proper motivation to fulfill their
commitments and that vendors and strategic partners could terminate their relationships
with us or require financial assurances or enhanced performance to continue their business
relationships with us, which may be unduly burdensome on our business and operations;
    
    our ability to negotiate and consummate the Sale Transactions;
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
    
    the actions and decisions of our creditors and other third parties with interests in our
Chapter 11 Cases may be inconsistent with our plans;
    
    objections to or limitations on our ability to obtain Bankruptcy Court approval with
respect to motions in the Chapter 11 Cases that we may seek from time to time or potential
adverse decisions by the Bankruptcy Court with respect to such motions;
    
    objections to or limitations on our ability to reject contracts that are burdensome or
uneconomical;
    
    our ability to obtain and maintain commercially reasonable terms with vendors, strategic
partners and service providers;
    
    our ability to obtain and maintain contracts that are critical to our operations;
    
    our ability to retain client engagements and maintain our billing and utilization rates;
    
    our ability to retain and motivate our managing directors and other key employees; and
    
    our ability to maintain adequate financing and cash on hand and to generate sufficient
cash from operations.
   Operating under the Bankruptcy Code may restrict our ability to pursue our business
strategies.
  
    
    sell assets outside the ordinary course of business;
    
    consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
    
    meet our capital needs;
    
    grant liens; and
    
    finance our operations, investments or other capital needs or to engage in other
business activities that would be in our interest.
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Our liquidity position and our ability to continue as a going concern impose significant risks
to our operations.
  We will not be able to pursue our original Plan, as filed with the Bankruptcy Court on
February 18, 2009.
  If the conditions to closing the Sale Transactions are not satisfied, the Sale Transactions
may be terminated, which would have a significant adverse impact on us and the Chapter 11 Cases.
  The
Sale Transactions could be negatively affected by current
adverse conditions in financial markets.
  Failure to complete the Sale Transactions could negatively impact our business.
  
    
    having to convert from a proceeding under chapter 11 of the Bankruptcy Code to a
liquidation proceeding under either chapter 11 or chapter 7 of the Bankruptcy Code;
    
    having to negotiate one or more alternative sale transactions, which may not create as
much value as the Sale Transactions; and
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
    
    having the focus of our senior management directed toward the proposed Sale Transactions
instead of on our stand-alone operations.
  The pursuit of the Chapter 11 Cases and the Sale Transactions have consumed and will continue
to consume a substantial portion of the time and attention of our management, and certain aspects
of the Sale Transactions will impact how our business is conducted, which may have an adverse
effect on our business and results of operations.
  Uncertainty related to the Sale Transactions could have a material adverse effect on our
business.
  We have experienced increased levels of employee attrition, we have begun to reduce our
workforce and our employees are facing considerable distractions and uncertainty, due to the
Chapter 11 Cases and the Sale Transactions.
  We will be subject to claims made after the date that we filed for bankruptcy and other claims
that are not discharged in the Chapter 11 Cases, which could have a material adverse effect on our
results of operations and financial condition.
  We likely will be unable to timely file certain periodic reports with the SEC.
  10




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Risks that Relate to Our Common Stock
 Trading in our securities during the pendency of the Chapter 11 Cases is highly speculative
and poses substantial risks. Regardless of whether the Sale Transactions are consummated or an
alternate plan of reorganization is confirmed by the Bankruptcy Court, our common stock likely will
be cancelled and holders of such common stock likely will not receive any distribution with respect
to, or be able to recover any portion of, such investment.
  Our common stock has been delisted from the NYSE and is not listed
on any other national securities exchange. It will likely be more difficult for stockholders and
investors to sell our common stock or to obtain accurate quotations of the share price of our
common stock.
   
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  11




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ITEM 3. LEGAL PROCEEDINGS
 Chapter 11 Cases
   Overview
  
    
    Claims and investigations arising from our inability to timely file periodic reports
under the Exchange Act, and the restatement of our financial statements for certain prior
periods to correct accounting errors and departures from generally accepted accounting
principles for those years;
    
    Claims and investigations being conducted by agencies or officers of the U.S. Federal
government and arising in connection with our provision of services under contracts with
agencies of the U.S. Federal government; and
    
    Claims made in the ordinary course of business by clients seeking damages for alleged
breaches of contract or failure of performance, by current or former employees seeking
damages for alleged acts of wrongful termination or discrimination and by creditors or
other vendors alleging defaults in payment or performance.
 SEC Reporting Matters
 2005 Class Action Suits.
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Makor Issues & Rights, Ltd v. Tellabs Tellabs
 2005 Shareholders Derivative Demand.
 SEC Investigation.
  13




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Government Contracting Matters
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  (1)
    
    Election of Directors. Our stockholders elected the following persons as Class II
directors to hold office until the annual meeting of stockholders to be held in 2011 and
their respective successors have been duly elected and qualified.
 Nominee for Class I Director
    
    For
    
    WithholdWolfgang H. Kemna
    
    
    119,646,439
    
    
    
    59,096,506Albert L. Lord
    
    
    103,531,942
    
    
    
    75,211,003J. Terry Strange
    
    
    119,484,462
    
    
    
    59,258,483
 Ratification of Appointment of Ernst & Young LLP.
 For
    
    Against
    
   Abstain169,758,988
    
    
    1,783,706
    
    
    
    7,200,251(3)    
Amendment to the Amended and Restated Certificate of Incorporation. The Board of
Directors amended and restated the Companys Amended and Restated Certificate of
Incorporation, effective immediately following the Companys Annual Meeting, to permit the
Board of Directors, at their discretion, to enact a reverse stock split of the Companys
common stock at a ratio within the range from one-for-ten and one-for-fifty at any time prior
to January 16, 2009.For
    

    Against
    
    Abstain152,226,526
    
    
    5,632,576
    
    
    
    20,883,843
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PART II.
 
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Market Information
   Price Range of Common Stock
 Price Range ofCommon StockHigh
    
    Low2008Fourth Quarter
    
    
    30.00
    
    
    
    1.00Third Quarter
    
    
    72.00
    
    
    
    25.00Second Quarter
    
    
    101.50
    
    
    
    31.00First Quarter
    
    
    145.50
    
    
    
    75.002007Fourth Quarter
    
    
    259.50
    
    
    
    122.50Third Quarter
    
    
    382.00
    
    
    
    191.50Second Quarter
    
    
    400.00
    
    
    
    345.00First Quarter
    
    
    428.00
    
    
    
    366.50
  Holders
  Dividends
  Reverse Stock Split
  15




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Equity Compensation Plan Information
(as of December 31, 2008)
 Number of securitiesremaining availableNumber of securities
    
    Weighted-average
    
    for future issuanceto be issued upon
    
    exercise price of
    
    under equityexercise of
    
    outstanding
    
    compensation plansoutstanding options,
    
    options, warrants
    
    (excluding securitiesPlan Category
    
    warrants and rights
    
    and rights
    
    reflected in column (a))Equity Compensation Plans Approved by Security Holders
    
    
    934,510
    
    
    $
    506.49
    
    
    
    1,177,690
    (1)(2)Equity Compensation Plans Not Approved by Security Holders
    
    
    13,325
    (3)
    
    $
    0.00
    
    
    
    Total
    
    
    947,835
    
    
    $
    506.49
    
    
    
    1,177,690
 
 (1)
    
    Includes 610,359 shares of common stock available for grants of stock options, restricted
stock, stock appreciation rights and other stock-based awards under our Amended and
Restated 2000 Long-Term Incentive Plan (the LTIP) and 567,331 shares of common stock
available for issuance under our Amended and Restated Employee Stock Purchase Plan (the
ESPP). Effective as of January 14, 2009, we terminated the ESPP program.(2)
    
    Under the LTIP, the number of shares of common stock authorized for grants or awards is
1,843,586. Under the ESPP, the number of shares of our common stock available for purchase
is 75,322 shares, plus an annual increase on the first day of each of our fiscal years
beginning on July 1, 2001 and ending on June 30, 2026 equal to the lesser of (i) 600,000
shares, (ii) three percent of the shares outstanding on the last day of the immediately
preceding fiscal year or (iii) a lesser number of shares as determined by our Board.(3)
    
    Consists of 13,325 outstanding RSUs held by Mr. Harbach, all of which were non-LTIP grants. Issuer Purchases of Equity Securities
  ApproximateDollar Value ofTotal Number of
    
    Shares that MayShares Purchased
    
    Yet Be Purchasedas Part of
    
    Under PubliclyPublicly
    
    Announced PlansTotal Number of
    
    Average Price
    
    Announced Plans
    
    or ProgramsPeriod
    
    Shares Purchased
    
    per Share
    
    or Programs(1)
    
    ($ in millions)(1)January 1, 2008 December 31, 2008
    
    
    2,321
    (2)
    
    $
    65.85
    
    
    
    
    $
    64.3
 
 (1)
    
    In July 2001, our Board authorized us to repurchase up to $100.0 million of our common stock. Any shares
so repurchased are held as treasury shares. During 2008, there were no open market purchases by the
Company of our common stock.(2)
    
    In 2008, as permitted under the LTIP, we acquired an aggregate of 1,979 shares of our common stock for an
aggregate price of $117,684 in connection with share withholding for payroll tax obligations due from
employees and former employees for the issuance of shares of common stock upon settlement of RSUs.
Additionally, we acquired an aggregate of 342 shares of our common stock in connection with repayment of
RSU gains realized totaling $35,180 from employees who terminated for cause. 16




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COMPARATIVE STOCK PERFORMANCE
   
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ITEM 6. SELECTED FINANCIAL DATA
  Statements of Operations
 Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(in thousands, except per share amounts)Revenue
    
    $
    3,197,041
    
    
    $
    3,455,562
    
    
    $
    3,444,003
    
    
    $
    3,388,900
    
    
    $
    3,375,782Costs of service:Costs of service(1)(2)
    
    
    2,521,254
    
    
    
    2,966,168
    
    
    
    2,863,856
    
    
    
    3,001,327
    
    
    
    2,816,559Lease and facilities
restructuring charge
    
    
    (3,524
    )
    
    
    20,869
    
    
    
    29,621
    
    
    
    29,581
    
    
    
    11,699Total costs of service
    
    
    2,517,730
    
    
    
    2,987,037
    
    
    
    2,893,477
    
    
    
    3,030,908
    
    
    
    2,828,258Gross profit
    
    
    679,311
    
    
    
    468,525
    
    
    
    550,526
    
    
    
    357,992
    
    
    
    547,524Amortization of purchased
intangible assets
    
    
    
    
    
    
    
    
    
    
    1,545
    
    
    
    2,266
    
    
    
    3,457Goodwill impairment
charge(3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    166,415
    
    
    
    397,065Selling, general and
administrative
expenses(1)(2)
    
    
    550,818
    
    
    
    701,317
    
    
    
    748,250
    
    
    
    750,867
    
    
    
    641,176Operating income (loss)
    
    
    128,493
    
    
    
    (232,792
    )
    
    
    (199,269
    )
    
    
    (561,556
    )
    
    
    (494,174
    )Insurance settlement
    
    
    
    
    
    
    
    
    
    
    38,000
    
    
    
    
    
    
    
    Interest
/other expense, net(4)
    
    
    (91,811
    )
    
    
    (57,698
    )
    
    
    (19,774
    )
    
    
    (37,966
    )
    
    
    (17,644
    )Loss on early
extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,617
    )Income (loss) before taxes
    
    
    36,682
    
    
    
    (290,490
    )
    
    
    (181,043
    )
    
    
    (599,522
    )
    
    
    (534,435
    )Income tax expense(5)
    
    
    68,754
    
    
    
    72,233
    
    
    
    32,397
    
    
    
    122,121
    
    
    
    11,791Net income (loss)
applicable to common
stockholders(6)
    
    
    (32,072
    )
    
    
    (362,723
    )
    
    
    (213,440
    )
    
    
    (721,643
    )
    
    
    (546,226
    )Income (loss) per share:Net (income) loss
applicable to common
stockholders  basic and
diluted
    
    $
    (7.18
    )
    
    $
    (83.90
    )
    
    $
    (50.30
    )*
    
    $
    (179.50
    )*
    
    $
    (138.61
    )*
 
 *
    
    Unaudited for reverse stock split, see Available
Information and Note 1, Reverse Stock Split. 18




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Balance Sheet Data
 December 31,
    
    December 31,
    
    December 31,
    
    December 31,
    
    December 31,2008
    
    2007
    
    2006
    
    2005
    
    2004(in thousands)Cash, cash equivalents,
and restricted cash(7)
    
    $
    353,132
    
    
    $
    468,518
    
    
    $
    392,668
    
    
    $
    376,587
    
    
    $
    265,863Total assets
    
    
    1,654,915
    
    
    
    1,981,404
    
    
    
    1,939,240
    
    
    
    1,972,426
    
    
    
    2,182,707Long-term liabilities(8)
    
    
    1,336,135
    
    
    
    1,538,801
    
    
    
    1,078,930
    
    
    
    976,501
    
    
    
    648,565Total debt
    
    
    976,916
    
    
    
    974,643
    
    
    
    671,850
    
    
    
    674,760
    
    
    
    423,226Total liabilities(8)
    
    
    2,201,146
    
    
    
    2,450,693
    
    
    
    2,116,541
    
    
    
    2,017,998
    
    
    
    1,558,009Total stockholders
(deficit) equity(8)
    
    
    (546,231
    )
    
    
    (469,289
    )
    
    
    (177,301
    )
    
    
    (45,572
    )
    
    
    624,698
 
 (1)
    
    During the year ended December 31, 2008, an adjustment of $77.2 million was recorded to reverse expenses recorded in 2007 associated with the
performance share unit (PSU) and performance cash award (PCA) plans, comprised of $62.7 million within costs of service and $14.5
million within selling, general and administrative expenses, due to the Companys estimate of the performance condition not being probable of
achievement at the end of the plan period. During the year ended December 31, 2008, an additional adjustment was recorded of $37.0 million, which
increased net income, comprised of $36.6 million within cost of service and $0.4 million within selling, general and administrative expense, to
adjust accruals associated with global tax equalization expense. During the year ended December 31, 2008, severance expenses of $27.6 million
were recorded, comprised of $22.1 million within costs of service and $5.5 million within selling, general and administrative expenses resulting
from routine adjustments to the size of our workforce to better meet the needs of the business.(2)
    
    During the year ended December 31, 2007, an adjustment of $7.6 million was recorded, comprised of $2.5 million within costs of service and
$5.1 million within selling, general and administrative expenses, to adjust the stock-based compensation expense to account for an increase in
the estimated forfeiture rate and capture the impact of unanticipated forfeitures that occurred in the fourth quarter of 2007.(3)
    
    During the years ended December 31, 2005 and 2004, we recorded goodwill
impairment charges of $166.4 million and $397.1 million, respectively.(4)
    
    During the year ended December 31, 2004, we recorded a change in accounting principle resulting in a charge of $0.5 million related to the
elimination of a one-month lag in reporting for certain Asia Pacific subsidiaries, as well as a subsidiary within the EMEA region. While the
elimination of the one-month lag is considered a change in accounting principle, the effect of the change is included in other income (expense)
due to the immateriality of the change in relation to consolidated net loss.(5)
    
    During the year ended December 31, 2005, we recorded a valuation allowance of $55.3 million, primarily against our U.S. deferred tax assets to
reflect our conclusion that it is more likely than not that these tax benefits would not be realized.(6)
    
    During the fourth quarter of 2006, the one-month reporting lag in the remaining EMEA entities was eliminated. The elimination of one month of
activity increased our 2006 consolidated net loss for the year ended December 31, 2006 by $1.2 million.(7)
    
    Restricted cash amounts at December 31, 2007, 2006, 2005 and 2004 were $1.7 million, $3.1 million, $121.2 million and $21.1 million, respectively.(8)
    
    During the year ended December 31, 2007, we recognized an increase of approximately $119.8 million in liability for unrecognized tax benefits,
which was reflected as an increase to the January 1, 2007 balance of accumulated deficit as a result of adopting the provisions of Financial
Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, as of January 1, 2007.  19




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 The following Managements Discussion and Analysis of Financial Condition and Results of
Operation (MD&A) should be read in conjunction with the Consolidated Financial Statements and the
Notes to Consolidated Financial Statements included elsewhere in this Annual Report. This Annual
Report contains forward-looking statements that involve risks and uncertainties. See
Forward-Looking Statements.
 Overview
  Chapter 11 Bankruptcy Proceedings and Sale Transactions
 In re BearingPoint, Inc., et al.
     20




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
    
    New Senior Secured Credit Facility.  The 2007 Credit Facility would be replaced with
a new senior secured credit facility as follows: term loan in the amount of $272 million
plus accrued interest and a synthetic letter of credit facility in the amount of up to
$130 million; plus the issuance of new convertible preferred stock with a liquidation
preference of $50 million, plus accrued and unpaid dividends, which would be convertible
into class 3 common stock (as described below).
    
    Unsecured Debt.  All unsecured debt would be exchanged for three different classes of
common stock. Holders of the 5.00% Convertible Senior Debentures and holders of the $40
million 0.50% Convertible Senior Subordinated Debentures due 2010 would receive shares
of class 1 common stock. Holders of the $250 million 2.50% Series A Convertible
Subordinated Debentures due 2024 and holders of the $200 million 2.75% Series B
Convertible Subordinated Debentures due 2024 would receive shares of class 2 common
stock. Certain general unsecured creditors would receive shares of class 3 common
stock. The three classes of common stock would be entitled to the same dividends,
distributions and voting rights, except that until the holders of class 1 common stock
had received dividends and distributions of $240 million, such holders would be entitled
to the dividend, distribution and voting rights (except with respect to the election of
directors) of the holders of class 2 common stock.
    
    Existing Equity.All existing equity in the Company would be cancelled for no
consideration.
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www.bearingpoint.com
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Going Concern
  Economic and Industry Factors
    Revenue and Income Drivers
     23




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Key Performance Indicators
  
    
    Bookings.We believe that information regarding our new contract bookings provides useful
trend information regarding how the volume of our new business changes over time. Comparing
the amount of new contract bookings and revenue provides us with an additional measure of
the short-term sustainability of revenue growth. Information regarding our new bookings
should not be compared to, or substituted for, an analysis of our revenue over time. There
are no third-party standards or requirements governing the calculation of bookings. New
contract bookings are recorded using then existing currency exchange rates and are not
subsequently adjusted for currency fluctuations. These amounts represent our estimate at
contract signing of the net revenue expected over the term of that contract and involve
estimates and judgments regarding new contracts as well as renewals, extensions and
additions to existing contracts. Subsequent cancellations, extensions and other matters may
affect the amount of bookings previously reported; however, we do not revise previously
reported bookings. Bookings do not include potential revenue that could be earned from a
client relationship as a result of future expansion of service offerings to that client, nor
does it reflect option years under contracts that are subject to client discretion. We do
not record unfunded U.S. Federal contracts as new contract bookings while appropriation
approvals remain pending, as there can be no assurances that these approvals will be
forthcoming in the near future, if at all. Consequently, there can be significant
differences between the time of contract signing and new contract booking recognition. Our
level of bookings provides an indication of how our business is performing: a positive
variance between bookings and revenue is indicative of business momentum, a negative
variance is indicative of a business downturn. Nonetheless, we do not characterize our
bookings, or our engagement contracts associated with new bookings, as backlog because our
engagements generally can be cancelled or terminated on short notice or without notice.
    
    Revenue Growth.Unlike bookings, which provide only a general sense of future
expectations, period-over-period comparisons of revenue provide a meaningful depiction of
how successful we have been in growing our business over time.We believe that it is also useful to monitor net revenue, as well as revenue growth. Net
revenue represents the actual amount paid by our clients for the services we provide, as
opposed to services provided by others and ancillary costs and expenses. Net revenue is a
non-GAAP financial measure. The most directly comparable financial measure in accordance with
generally accepted accounting principles in the United States of America (GAAP) is revenue.
Net revenue is derived by reducing the components of revenue that consist of other direct
contract expenses, which are costs that are directly attributable to client engagements. These
costs include items such as computer hardware and software, travel expenses for professional
personnel and costs associated with subcontractors.
    
    Gross Margin (gross profit as a percentage of revenue).Gross margin is a meaningful tool
for monitoring our ability to control our costs of service. Analysis of the various cost
elements, including professional compensation expense, effects of foreign exchange rate
changes and the use of subcontractors, as a percentage of revenue over time can provide
additional information as to the key challenges we are facing in our business. The cost of
subcontractors is generally more expensive than the cost of our own workforce and can
negatively impact our gross profit. While the use of subcontractors can help us to win
larger, more complex deals, and also may be mandated by our clients, we focus on limiting
the use of subcontractors whenever possible in order to minimize our costs. We also utilize
certain adjusted gross margin metrics in connection with the vesting and settlement of
certain employee incentive awards. For a discussion of these metrics, see Item 11,
Executive Compensation  Compensation Discussion and Analysis.We also monitor contribution margin to better review the profitability of our respective
operating segments. Contribution margin is a non-GAAP financial measure. The most directly
comparable financial measure in accordance with GAAP is gross margin. Contribution margin is
calculated by subtracting, from net revenue, professional compensation, other costs of service,
SG&A and certain other allocations, and then dividing by net revenue.
    
    Utilization.Utilization represents the percentage of time our consultants are performing
work, and is defined as total hours charged to client engagements or to non-chargeable
client-relationship projects divided by total available hours for any specific time period,
net of holiday and paid vacation hours.
 24




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
    
    Days Sales Outstanding (DSO).DSO is an operational metric that approximates the amount
of earned revenue that remains unpaid by clients at a given time. DSOs are derived by
dividing the sum of our outstanding accounts receivable and unbilled revenue, less deferred
revenue, by our average net revenue per day. Average net revenue per day is determined by
dividing total net revenue for the most recently ended trailing twelve-month period by 365.
    
    Free Cash Flow.Free cash flow is calculated by subtracting purchases of property and
equipment from cash provided by operating activities. We believe free cash flow is a useful
measure because it allows better understanding and assessment of our ability to meet debt
service requirements and the amount of recurring cash generated from operation after
expenditures for fixed assets. Free cash flow does not represent our residual cash flow
available for discretionary expenditures as it excludes certain mandatory expenditures such
as repayment of maturing debt. We use free cash flow as a measure of recurring operating
cash flow. Free cash flow is a non-GAAP financial measure. The most directly comparable
financial measure calculated in accordance with GAAP is net cash provided by operating
activities.
    
    Attrition.Attrition, or voluntary total employee turnover, is calculated by dividing the
number of our employees who have chosen to leave the Company within a certain period by the
total average number of all employees during that same period. Our attrition statistic
covers all of our employees, which we believe provides metrics that are more compatible
with, and comparable to, those of our competitors.
  Discussion of Certain 2008 Financial Results
   
    
    New contract bookings for 2008 were $2,710.6 million, a decrease from new contract
bookings of $2,864.9 million for 2007.
    
    During the year ended December 31, 2008, an adjustment of $66.6 million and $10.6 million
was recorded to reverse expenses recorded in 2007 associated with the PSU and PCA plans,
respectively, due to the Companys estimate of the performance conditions not being probable
of achievement at the end of the plan period.
    
    Global tax equalization refers to our policy of estimating and recording expenses to
ensure that our employees working on domestic long-term and foreign short-term assignments
outside of their home tax jurisdiction will be subject to the same level of personal tax as
their home tax jurisdiction. If the estimated tax equalization liability is determined to be
greater or less than the amount due upon final settlement, the difference is recorded in the
current period. During 2008, we reversed accruals of $37.0 million in connection with our
global tax equalization policy, which resulted in our professional compensation expense
being reduced by this amount.
    
    During 2008, we implemented numerous new controls in our efforts toward remediating our
material weaknesses in internal control over financial reporting. One material weakness
remains (see Item 9A of this Annual Report).
    
    As of January 1, 2009, we combined three of our business segments: Commercial Services,
Financial Services, and Latin America and began managing the operations of these three
segments as one combined segment reporting to a single segment leader, and began realigning
resources and internal management in order to gain synergies in both costs and revenue.
    
    Utilization for 2008 was 78.9%, compared with 77.2% in 2007.
    
    As of December 31, 2008, our DSOs stood at 66 days, representing a decrease of 11 days,
or 14.3%, from our DSOs at December 31, 2007 of 77 days.
 25




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
    
    Free cash flow for 2008 and 2007 was ($112.1) million and ($231.5) million, respectively.
Net cash used in operating activities in 2008 and 2007 was ($63.9) million and
($193.3) million, respectively. Purchases of property and equipment in 2008 and 2007 were
$48.2 million and $38.2 million, respectively.
    
    During 2008, we spent approximately $39.9 million in connection with the implementation
of our new North American financial reporting system, of which $15.6 million was expensed
and $24.3 million was capitalized, including $2.1 million of interest costs. We finalized
decisions regarding the design of, and obtained licenses for the components needed to
substantially replace, our existing North American financial reporting systems. This
implementation has been suspended due to the Companys Sale Transactions.
    
    As of December 31, 2008, we had approximately 15,200 full-time employees, including
approximately 12,700 consulting professionals, which represented a decrease in billable
headcount of approximately 11.8% from full-time employees and consulting professionals at
December 31, 2007 of 17,100 and 14,400, respectively.
    
    Our voluntary, annualized attrition rate for 2008 was 24.8%, compared to 24.7% for 2007.
    
    In 2008, we paid performance-based cash bonuses totaling approximately $30.7 million
($17.2 million to staff and $13.5 million to managing directors), based on 2007 performance.
As of December 31, 2008, we had accrued performance-based cash bonuses totaling approximately
$19.6 million based on 2008 performance, however, as a result of
our bankruptcy and Sale Transactions, we currently do not anticipate
paying this full amount.
    
    In April 2009, the U.S. Defense Contract Audit Agency (DCAA) issued a report on its
audit of our financial capability, which concluded that our financial condition is
unfavorable for performing government contracts due to our filing for bankruptcy. However,
we are still eligible to continue to receive contract awards of all types from the
U.S. Federal government. The DCAA examined our financial condition and capability and
determined we may not have adequate financial resources to perform government contracts in
the current and near-term (up to one year) without extraordinary management actions.
    
    At the annual meeting of stockholders, held on December 5, 2008, the Board approved the
implementation of a one-for-fifty reverse stock split of the Companys common stock.  The
record and effective date for the reverse stock split was December 10, 2008.  As of the
record date, the Company had 220,851,816 shares of common stock outstanding and upon the
effectiveness of the reverse stock split, the Company had 4,417,036 shares of common stock
outstanding.  The reverse stock split had no effect on the number of authorized shares of
common stock.
 Segments
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Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
 Revenue.
 Percent

    
    
    PercentYear Ended
    
    
    
    
    
    
    
    Increase
    
    
    IncreaseDecember 31,
    
    
    
    
    
    
    
    (Decrease)
    
    
    (Decrease)2008
    
    
    2007
    
    
    US$ Change
    
    
    
    US$
    
    
    Local CurrencyRevenuePublic Services
    
    $
    1,368,992
    
    
    $
    1,432,645
    
    
    $
    (63,653
    )
    
    
    (4.4
    %)
    
    
    (4.4
    %)Commercial Services
    
    
    386,599
    
    
    
    509,789
    
    
    
    (123,190
    )
    
    
    (24.2
    %)
    
    
    (24.2
    %)Financial Services
    
    
    185,978
    
    
    
    264,198
    
    
    
    (78,220
    )
    
    
    (29.6
    %)
    
    
    (29.6
    %)EMEA
    
    
    833,520
    
    
    
    791,298
    
    
    
    42,222
    
    
    
    5.3
    %
    
    
    (1.2
    %)Asia Pacific
    
    
    324,047
    
    
    
    362,715
    
    
    
    (38,668
    )
    
    
    (10.7
    %)
    
    
    (18.3
    %)Latin America
    
    
    101,361
    
    
    
    90,091
    
    
    
    11,270
    
    
    
    12.5
    %
    
    
    5.8
    %Corporate/Other
    
    
    (3,456
    )
    
    
    4,826
    
    
    
    (8,282
    )
    
    
    n/m
    
    
    
    n/mTotal
    
    $
    3,197,041
    
    
    $
    3,455,562
    
    
    $
    (258,521
    )
    
    
    (7.5
    %)
    
    
    (10.0
    %)
 
 n/m = not meaningful 
    
    Public Servicesrevenue decreased in 2008 due to declines in the SLED, Healthcare, and
Emerging Markets sectors, partially offset by increases in the Civilian and Defense sectors.
The declines in the SLED, Healthcare, and Emerging Markets sectors were primarily due to a
reduced demand for services. Additionally SLED was negatively impacted by reductions in
revenue due to performance issues on certain SLED contracts, and declines in Emerging Markets
sector were the result of our decision to exit certain locations due to security concerns.
Revenue growth in the Civilian sector was due to increased activity with existing clients as
well as increases in billing rates for our services. Revenue growth in the Defense sector was
due to increased demand for our services, and the recognition of $7.7 million in revenue
during the first quarter of 2008 relating to work performed in earlier periods for which
contract contingencies were resolved in the current period.
    
    Commercial Servicesrevenue decreased significantly in 2008 due to declines in all sectors.
Revenue decreases were attributable to reduced demand for our services and reductions in the
effective rates charged for our services.
    
    Financial Servicesrevenue decreased significantly in 2008 due to revenue decreases in the
Banking, Services and Global Markets sectors, slightly offset by revenue increases in the
Insurance sector. Revenue decreases were attributable, in part, to lower levels of contract
signings since the fourth quarter of 2007. These decreases were due to a combination of
factors, including reduced demand for our services, and our devoting significant efforts
during the first quarter of 2008 to reducing headcount and stabilizing our business model, as
many clients deferred new initiatives in the wake of the crisis in the financial markets and
became increasingly sensitive to negative perceptions regarding our financial stability.
These revenue declines were only slightly offset by increased revenue in the Insurance sector
driven by additional efforts on a small number of large client engagements.
    
    EMEA revenue increased during 2008 primarily as a result of the favorable impact of the
strengthening of foreign currencies, specifically the Euro, against the U.S. dollar. The
currency impact further enhanced meaningful revenue growth in Germany and France, and
partially offset the effects of revenue decreases in the United Kingdom, Spain, Sweden and
Norway. The increase in revenues in Germany and France resulted from both increased billing
rates and increased demand for our services. Revenues in Spain continue to decline as a
result of our strategic decision to significantly reduce our activities in this country. The
revenues in the United Kingdom, Sweden and Norway declined due to the loss of key personnel
in the early part of 2008 in these countries.
    
    Asia Pacificrevenue decreased during 2008 primarily as a result of revenue declines in
Australia, and New Zealand. These revenue declines were offset by the favorable impact of the
strengthening of the Japanese yen against the U.S. dollar. The
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favorable impact of the strengthening yen fully offset revenue declines in local currency in
Japan, resulting in marginal revenue growth in U.S. dollars. In Australia, we experienced
significant attrition and lost a number of key employees, in early 2008, which led to a
substantial reduction in our business and lower revenues in 2008. Revenues in Australia were
also adversely impacted by the transitioning of work on a large systems implementation contract
with a telecommunication client in the support phase. In Japan the decline in revenue in local
currency was due largely to the impact of fewer projects related to J-SOX and the decline in
rates billed for our work on a particularly large systems implementation contract. In
addition, our decision to reduce our presence in New Zealand in late 2007 resulted in
significantly less revenue year over year. All countries in the region were significantly
impacted by the current economic slowdown, which resulted in reduced bookings and revenue.
    
    Latin Americarevenue increased in 2008 primarily as a result of revenue increases in
Brazil and Costa Rica, as well as the favorable impact of the strengthening of the Brazilian
Real against the U.S. dollar. These increases were only partially offset by revenue declines
in Mexico.
    
    Corporate/Other:Our Corporate/Other segment does not contribute significantly to our
revenue.
 Gross Profit.
 
    
    Professional compensation expense decreased as a percentage of revenue to 48.9% for 2008,
compared to 53.8% for 2007. We experienced a net decrease in professional compensation
expense of $294.2 million, or 15.8%, to $1,564.2 million for 2008 over $1,858.5 million for
2007. The decrease in professional compensation was primarily due to reductions in headcount
in every segment, the reversal of $62.7 million of expenses recorded in 2007 associated with
the performance share unit (PSU) and performance cash award (PCA) plans due to the
Companys estimate of the performance condition not being probable of achievement at the end
of the plan period, a $37.0 million adjustment related to the reversal of accruals in
connection with our global tax equalization and a decline in cost of service bonus expense
of $37.9 million. Dampening the declines in professional compensation was the unfavorable
impact of $44.6 million as a result of the strengthening of foreign currencies against the
U.S. dollar.
    
    Other direct contract expenses decreased as a percentage of revenue to 21.1% for 2008
compared to 23.4% for 2007. We experienced a net decrease in other direct contract expenses
of $133.1 million, or 16.5%, to $674.6 million for 2008 from $807.7 million for 2007. The
decrease was driven primarily by reduced subcontractor expenses as a result of increased use
of our internal resources coupled with a decline in the volume of work. Dampening the
declines of other direct contract expenses was the unfavorable impact of $13.9 million as a
result of the strengthening of foreign currencies against the U.S. dollar.
    
    Other costs of service as a percentage of revenue increased slightly to 8.8% for 2008
from 8.7% for 2007. We experienced a net decrease in other costs of service of
$17.6 million, or 5.9%, to $282.4 million for 2008 from $300.0 million for 2007. The
decrease was primarily due to a decline in depreciation and amortization expense of $11.3
million, a decline in rent and facilities related expenses of $7.8 million, and a decline in
bad debt expense of $3.8 million. Partially offsetting the declines in other cost of service
was $11.5 million of expense associated with the settlement of a contract dispute with one
particular Public Services client. Additionally, dampening the declines in other cost of
service was the unfavorable impact of $6.6 million as a result of the strengthening of
foreign currencies against the U.S. dollar.
    
    In 2008 we recorded, within the Corporate/Other operating segment, a credit of
$3.5 million for lease and facilities restructuring costs, compared to a $20.9 million
charge for lease and facilities restructuring costs in 2007. These costs for 2008 related
primarily to the fair value of future lease obligations associated with office space,
primarily within the EMEA and North America regions, which we no longer use.
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Gross Profit by Segment.
 Percent
    
    
    PercentYear Ended

    
    
    
    
    
    
    
    Increase
    
    
    IncreaseDecember 31,

    
    
    
    
    
    
    
    (Decrease)
    
    
    (Decrease)2008
    
    
    2007
    
    
    US$ Change
    
    
    
    US$
    
    
    Local CurrencyGross ProfitPublic Services
    
    $
    328,794
    
    
    $
    263,431
    
    
    $
    65,363
    
    
    
    24.8
    %
    
    
    24.8
    %Commercial Services
    
    
    85,736
    
    
    
    81,656
    
    
    
    4,080
    
    
    
    5.0
    %
    
    
    5.0
    %Financial Services
    
    
    47,766
    
    
    
    41,627
    
    
    
    6,139
    
    
    
    14.7
    %
    
    
    14.7
    %EMEA
    
    
    183,260
    
    
    
    153,959
    
    
    
    29,301
    
    
    
    19.0
    %
    
    
    10.5
    %Asia Pacific
    
    
    90,110
    
    
    
    81,946
    
    
    
    8,164
    
    
    
    10.0
    %
    
    
    (0.4
    %)Latin America
    
    
    17,433
    
    
    
    (11,240
    )
    
    
    28,673
    
    
    
    255.1
    %
    
    
    241.7
    %Corporate/Other
    
    
    (73,788
    )
    
    
    (142,854
    )
    
    
    69,066
    
    
    
    n/m
    
    
    
    n/mTotal
    
    $
    679,311
    
    
    $
    468,525
    
    
    $
    210,786
    
    
    
    45.0
    %
    
    
    40.2
    %
 Year Ended December 31,2008
    
    2007Gross Profit as a Percentage of RevenuePublic Services
    
    
    24.0
    %
    
    
    18.4
    %Commercial Services
    
    
    22.2
    %
    
    
    16.0
    %Financial Services
    
    
    25.7
    %
    
    
    15.8
    %EMEA
    
    
    22.0
    %
    
    
    19.5
    %Asia Pacific
    
    
    27.8
    %
    
    
    22.6
    %Latin America
    
    
    17.2
    %
    
    
    (12.5
    %)Corporate/Other
    
    
    n/m
    
    
    
    n/mTotal
    
    
    21.2
    %
    
    
    13.6
    %
 
 n/m =
    
    not meaningful  
    
    Public Servicesgross profit increased in 2008 despite the decline in revenue, primarily
due to the significant reductions in other direct contract expense and professional
compensation. These cost savings were primarily due to decreases in subcontractor expenses,
the reversal of compensation expense associated with our PSU and PCA plans as discussed
above, and the reversal of costs associated with global tax equalization. Though revenue
declined during 2008, gross profit was positively impacted by the recognition of $7.7
million in revenue during the first quarter of 2008 relating to work performed in earlier
periods for which contract contingencies were resolved in the current period. Gross profit
improvements were also attributable to improved results in the Defense and Civilian sectors.
The improvements were substantially offset with declines in the SLED and Emerging Markets
sectors due to revenue declines coupled with an increase in costs associated with one large
loss contract in the SLED sector.
    
    Commercial Servicesgross profit increased in 2008 as the impact of significant revenue
declines in most sectors was more than offset by significant reductions in professional
compensation, and, to a lesser extent, reductions in other direct contract expenses. The
reduction in professional compensation was due primarily to the effects of continuing
headcount reductions, including reductions among additional internal personnel allocated to
this segment, the reversal of compensation expense associated with our PSU and PCA plans as
discussed above, and the reversal of costs associated with global tax equalization.
    
    Financial Servicesgross profit increased slightly in 2008 as the impact of significant
revenue decreases were offset by significant decreases in professional compensation, and, to
a lesser extent, reductions in other direct contract expenses and other cost of service. The
reduction in professional compensation was due primarily to the reversal of compensation
expense associated with our PSU and PCA plans discussed above, and, to a lesser extent,
accrual reversals for costs associated with global tax equalization recorded during the
year, as well as the effects of continuing headcount reductions in response to declining
demand for our services.
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##### Table of Contents




    
    EMEAgross profit increased in 2008 due to the favorable impact of the strengthening of
the Euro against the U.S. dollar, as well as increased profitability, primarily in Germany
and France. These increases in profitability were driven by increases in revenue coupled
with decreases in professional compensation and other costs of services as a result of cost
reduction efforts executed throughout the year. Additionally other cost of service also
declined due to an asset impairment recorded in 2007 without any corresponding impairment
recorded in 2008.
    
    Asia Pacificgross profit increased in 2008 due primarily to the favorable impact of the
strengthening of foreign currencies against the U.S. dollar, particularly the Japanese yen.
Significant declines in revenue, particularly in Australia, Japan, and New Zealand were
substantially offset by lower professional compensation and other direct contract expenses.
These declines in cost of service were in response to the lower volume of work in the region
due to the significant reduction in staffing levels in Australia and New Zealand, a slowing
economy, as well as lower use of sub-contracted labor in Japan and a reduction in cost
accruals related to loss contracts.
    
    Latin Americagross profit increased in 2008 due to increases in revenue as well as
reductions in professional compensation.
    
    Corporate/Othercontains rent and facilities expenses not specifically allocated to one of
the reportable segments, as well as the residual expenses of our Global Delivery Centers
(GDCs) and other cross industry technology resources, which are charged out to our
reportable segments as they are utilized on customer facing engagements. In 2008, we
experienced declines in lease and facilities charges of $38.0 million, as well as $22.4
million of lower residual expenses for our GDCs as a result of the change in the method we
utilize to cross charge the costs associated with these personnel to the other segments.
While the declines in lease and facilities related charges contributed to consolidated growth
in gross profit, the lower residual expenses associated with our GDCs would have been
absorbed within the other segments and would not contribute to growth in consolidated gross
profit.
 Selling, General and Administrative Expenses.
 Interest Income.
 Interest Expense.
 Other Expense, net.
 Income Tax Expense.
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
    
    An increase in gross profit of $210.8 million in 2008;
    
    A decrease in selling, general and administrative expenses of $150.5 million in 2008;
and offset by
    
    An increase in other expense of $29.6 million in 2008 due to foreign currency
exchange losses associated with the revaluation of our intercompany payables and
receivables.
 Year Ended December 31, 2007 Compared to Year Ended December 31, 2006
 Revenue.
 Year Ended December 31,2007
    
    
    2006
    
    
    $ Change
    
    
    
    % ChangeRevenuePublic Services
    
    $
    1,432,645
    
    
    $
    1,339,358
    
    
    $
    93,287
    
    
    
    7.0
    %Commercial Services
    
    
    509,789
    
    
    
    554,806
    
    
    
    (45,017
    )
    
    
    (8.1
    )%Financial Services
    
    
    264,198
    
    
    
    399,331
    
    
    
    (135,133
    )
    
    
    (33.8
    )%EMEA
    
    
    791,298
    
    
    
    703,083
    
    
    
    88,215
    
    
    
    12.5
    %Asia Pacific
    
    
    362,715
    
    
    
    360,001
    
    
    
    2,714
    
    
    
    0.8
    %Latin America
    
    
    90,091
    
    
    
    82,319
    
    
    
    7,772
    
    
    
    9.4
    %Corporate/Other
    
    
    4,826
    
    
    
    5,105
    
    
    
    (279
    )
    
    
    n/mTotal
    
    $
    3,455,562
    
    
    $
    3,444,003
    
    
    $
    11,559
    
    
    
    0.3
    %
 Impact of
    
    Revenue growthcurrency
    
    (decline), net offluctuations
    
    currency impact
    
    TotalRevenuePublic Services
    
    
    0.0
    %
    
    
    7.0
    %
    
    
    7.0
    %Commercial Services
    
    
    0.0
    %
    
    
    (8.1
    )%
    
    
    (8.1
    )%Financial Services
    
    
    0.0
    %
    
    
    (33.8
    )%
    
    
    (33.8
    )%EMEA
    
    
    9.4
    %
    
    
    3.1
    %
    
    
    12.5
    %Asia Pacific
    
    
    1.7
    %
    
    
    (0.9
    )%
    
    
    0.8
    %Latin America
    
    
    9.5
    %
    
    
    (0.1
    )%
    
    
    9.4
    %Corporate/Other
    
    
    n/m
    
    
    
    n/m
    
    
    
    n/mTotal
    
    
    2.3
    %
    
    
    (2.0
    )%
    
    
    0.3
    %
 
 n/m =
    
    not meaningful 
    
    Public Servicesrevenue increased in 2007 due to significant revenue growth in our
Emerging Markets, SLED and Civilian sectors. Revenue growth within these sectors was
partially derived from expected increases in work on several large existing multi-year
contracts signed in prior years. Revenue in our Defense sector declined somewhat, due to
congressional decisions regarding ongoing funding by the U.S. government of the continuing
war on terrorism and combat operations in Iraq and Afghanistan, as well as increased
budgetary pressures on U.S. defense spending. The non-governmental portion of our Healthcare
sector also experienced revenue declines.
    
    Commercial Servicesrevenue decreased in 2007. While we experienced significant revenue
growth in our Energy sector as client demand for the Companys industry-specific solutions
increased, overall, revenue decreased due to declines in the
 31




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##### Table of Contents



Communications and Media, High Technology and Manufacturing sectors. These declines were due,
in part, to decreased business levels caused by consolidation within the telecommunications
industry and disputes with two significant telecommunications clients in that sector.
    
    Financial Servicesrevenue decreased in 2007 due to significant revenue declines across
all of its industry sectors. Revenue decreases were attributable to several factors,
including the winding down of the segments largest client engagement during 2007. The
continuing effects of losses of senior staff in certain of our higher rate business sectors
also attributed to revenue declines in 2007. In addition, difficulties in securing long-term
client commitments and delays by clients in implementing new initiatives given the recently
reported industry-wide losses related to asset write-downs all had a negative effect on
revenue on a year-over-year basis.
    
    EMEArevenue increased in 2007, primarily as a result of the favorable impact of the
strengthening of foreign currencies, primarily the Euro, against the U.S. dollar, but also
due to significant revenue increases in France, Russia and Switzerland. Revenue growth in
France was due to an expanding systems implementation practice while revenue growth in
Russia and Switzerland was generally attributable to increased demand for our consulting
services in those markets. These increases were partially offset by revenue declines in
Spain and the United Kingdom. Revenue in the United Kingdom declined due to the reduction in
the volume of work provided to multi-national clients in 2007, and the decline in revenue in
Spain was attributable to our strategic decision to reduce our activities in this country.
    
    Asia Pacificrevenue increased in 2007, primarily as a result of the favorable impact of
the strengthening of foreign currencies against the U.S. dollar. Significant revenue growth
was achieved in Japan and to a lesser extent in China. These increases continue to be offset
by lower revenue in Australia, Korea and New Zealand. Japanese revenue increased due to
continued revenue growth from systems implementation contracts and projects involving
compliance with Japans Financial Instruments and Exchange Law. This growth began in 2006
and has continued throughout 2007. China revenue increased as a result of significant new
contracts signed with several large multi-national clients in 2007. Lower revenue in
Australia and New Zealand resulted from the winding down or completion of several
significant client engagements and partially due to deteriorating market conditions.
    
    Latin Americarevenue increased in 2007, with Brazil and Mexico contributing equally to
the growth in U.S. dollars. The favorable impact of the strengthening of the Brazilian Real
against the U.S. dollar served to offset local currency revenue declines in Brazil.
    
    Corporate/Other:Our Corporate/Other segment does not contribute significantly to our
revenue.
 Gross Profit.
 
    
    Professional compensation expense increased as a percentage of revenue to 53.8% for 2007,
compared to 50.1% for 2006. We experienced a net increase in professional compensation
expense of $133.0 million, or 7.7%, to $1,858.5 million for 2007 over $1,725.5 million for
2006. The increase in professional compensation was primarily due to merit-based annual
salary increases, increases in stock-based compensation expense for PSUs, RSUs and, to a
lesser extent, cash bonuses.
    
    Other direct contract expenses decreased as a percentage of revenue to 23.4% for 2007
compared to 25.8% for 2006. We experienced a net decrease in other direct contract expenses
of $80.4 million, or 9.1%, to $807.7 million for 2007 from $888.2 million for 2006. The
decrease was driven primarily by reduced subcontractor expenses as a result of increased use
of our internal resources. In addition, the decline was driven by higher other direct
contract expenses recorded in the first quarter of 2006 related to the HT Contract.
    
    Other costs of service as a percentage of revenue increased to 8.7% for 2007 from 7.3%
for 2006. We experienced a net increase in other costs of service of $49.8 million, or
19.9%, to $300.0 million for 2007 from $250.2 million for 2006. The increase was primarily
due to an increase in non-billable employees over the prior year, due in part to the
redeployment of existing employees from client-facing roles to practice support roles, which
resulted in related salaries and expenses now being reflected in other costs of service
rather than professional compensation expense.
 32




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##### Table of Contents




    
    In 2007 we recorded, within the Corporate/Other operating segment, a charge of
$20.9 million for lease and facilities restructuring costs, compared to a $29.6 million
charge for lease and facilities restructuring costs in 2006. These costs for 2007 related
primarily to the fair value of future lease obligations associated with office space,
primarily within the EMEA and North America regions, which we will no longer be using.
 Gross Profit by Segment.
 Year Ended December 31,2007
    
    
    2006
    
    
    $ Change
    
    
    
    % ChangeGross ProfitPublic Services
    
    $
    263,431
    
    
    $
    263,841
    
    
    $
    (410
    )
    
    
    (0.2
    )%Commercial Services
    
    
    81,656
    
    
    
    81,419
    
    
    
    237
    
    
    
    0.3
    %Financial Services
    
    
    41,627
    
    
    
    135,187
    
    
    
    (93,560
    )
    
    
    (69.2
    )%EMEA
    
    
    153,959
    
    
    
    129,523
    
    
    
    24,436
    
    
    
    18.9
    %Asia Pacific
    
    
    81,946
    
    
    
    80,448
    
    
    
    1,498
    
    
    
    1.9
    %Latin America
    
    
    (11,240
    )
    
    
    9,058
    
    
    
    (20,298
    )
    
    
    n/mCorporate/Other
    
    
    (142,854
    )
    
    
    (148,950
    )
    
    
    6,096
    
    
    
    n/mTotal
    
    $
    468,525
    
    
    $
    550,526
    
    
    $
    (82,001
    )
    
    
    (14.9
    )%
 Year Ended December 31,2007
    
    2006Gross Profit as a Percentage of RevenuePublic Services
    
    
    18.4
    %
    
    
    19.7
    %Commercial Services
    
    
    16.0
    %
    
    
    14.7
    %Financial Services
    
    
    15.8
    %
    
    
    33.9
    %EMEA
    
    
    19.5
    %
    
    
    18.4
    %Asia Pacific
    
    
    22.6
    %
    
    
    22.3
    %Latin America
    
    
    (12.5
    )%
    
    
    11.0
    %Corporate/Other
    
    
    n/m
    
    
    
    n/mTotal
    
    
    13.6
    %
    
    
    16.0
    %
 
 n/m =
    
    not meaningful  
    
    Public Servicesgross profit remained relatively unchanged in 2007. Significant
year-over-year revenue increases were offset by a significant increase in professional
compensation expense of $80.4 million, or 13.5%, over 2006, and additional costs and revenue
write-downs of approximately $15 million were taken on two of our SLED sector contracts. The
increase in professional compensation expense was associated with the hiring of additional
personnel needed to meet the demand for our services, as well as bonus payments and
accruals, and increases in stock-based compensation expense.
    
    Commercial Servicesgross profit remained relatively unchanged in 2007, with declines in
subcontractor expenses, professional compensation and reimbursable client expenses being
partially offset by reductions in revenue and contract losses. In 2006, Commercial Services
gross profit was negatively impacted by losses of approximately $86.2 million attributable
to settlements reached with two telecommunications clients, as compared to losses of
approximately $16.7 million in 2007, primarily in connection with a single Communications
and Media sector project.
    
    Financial Servicesgross profit significantly decreased in 2007, primarily due to
significantly lower revenue combined with a decline in higher margin engagements in the
total mix of engagements. Declines in revenue were partially offset by declines in
compensation expense, reimbursable client expenses and subcontractor expenses. These
declines in costs of services were at a slower pace than the declines in revenue, resulting
in lower gross profits in 2007 as compared to 2006.
    
    EMEAgross profit increased in 2007, primarily due to overall higher revenue in the EMEA
region as well as improved profitability in Germany, France and Switzerland as a result of
higher utilization and lower costs. This increase was partially
 33




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##### Table of Contents



offset by an increase in professional compensation due to a larger number of additional
personnel to meet the demand for our services and, to a lesser extent, an increase in other
costs of services. The increases in professional compensation and other costs of services were
partially offset by decreases in costs associated with subcontractors due largely to our effort
to increase the use of internal resources.
    
    Asia Pacificgross profit increased in 2007, due to increased revenue and improvements in
profitability and staff utilization in our Japanese business. In addition, positive growth
in gross profit in the region was realized from decreases in other direct contract expenses
as a result of decreased subcontractor usage in Japan, which were substantially offset by
higher professional compensation costs as well as increased contract loss reserves of
$12.1 million recorded during 2007 as compared to 2006.
    
    Latin America gross profit decreased in 2007, due to significant increases in
compensation expense, other direct contract expenses and contract write-offs. These
increases were driven by an increase in employee compensation recognized as a result of
statutory overtime regulations and other employee benefits in Brazil, and to a lesser extent
by increased subcontractor expenses in Mexico.
    
    Corporate/Otherconsists primarily of rent expense and other facilities related charges.
 Amortization of Purchased Intangible Assets.
 Selling, General and Administrative Expenses.
 Interest Income.
 Interest Expense.
 Insurance Settlement.
 Other (Expense) Income, net.
 Income Tax Expense.
 Net Loss.
 34




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##### Table of Contents



Obligations and Commitments
  Payments due by PeriodLess than
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    1 year
    
    1-3 years
    
    3-5 years
    
    5 yearsContractual ObligationsShort-term and long-term debt(1)
    
    
    1,238,773
    
    
    
    238,693
    
    
    
    98,152
    
    
    
    319,978
    
    
    
    581,950Operating leases
    
    
    234,763
    
    
    
    75,453
    
    
    
    92,254
    
    
    
    45,513
    
    
    
    21,543Purchase obligations(2)
    
    
    98,201
    
    
    
    57,751
    
    
    
    30,558
    
    
    
    9,372
    
    
    
    520Obligations under the pension and postretirement medical plans
    
    
    60,414
    
    
    
    4,164
    
    
    
    9,395
    
    
    
    10,901
    
    
    
    35,954Total(3)
    
    
    1,632,151
    
    
    
    376,061
    
    
    
    230,359
    
    
    
    385,764
    
    
    
    639,967
 
 (1)
    
    Short-term and long-term debt includes both principal and interest
scheduled payment obligations. Certain of our debt allows the holders
the right to convert the debentures into shares of our common stock or
cash (at the Companys option) in earlier periods than presented
above. For additional information, see Note 6, Notes Payable, of the
Notes to Consolidated Financial Statements.(2)
    
    Purchase obligations include material agreements to purchase goods or
services, principally software and telecommunications services, that
are enforceable and legally binding and that specify all significant
terms, including: fixed or minimum quantities to be purchased; fixed,
minimum or variable price provisions; and the approximate timing of
the transaction. Purchase obligations exclude agreements that are
cancelable without penalty. From time to time, our operating segments,
particularly our Public Services segment, enter into agreements with
vendors in the normal course of business that support existing
contracts with our clients (client vendor agreements). The vast
majority of these client vendor agreements involve subcontracts for
services to be provided by third-party vendors. These agreements may
be in the form of teaming agreements or may be a client requirement,
and can span multiple years, depending on the duration of the
underlying arrangement with our clients. We are liable for payments to
vendors under these client vendor agreements. We are unable to cancel
some of these client vendor agreements unless the related agreement
with our client is terminated and/or upon payment of a penalty.
However, our clients are generally obligated by contract to reimburse
us, directly or indirectly, for payments we make to vendors under
these agreements. We are not aware of any payments we have been
required to make to vendors after a related client contract has been
terminated. We currently estimate that the total payments we could be
obligated to make under all client vendor agreements known to us would
be approximately $57,237; however, we are unable to identify which of
these agreements might constitute purchase obligations.(3)
    
    The above table does not reflect unrecognized tax benefits of
$285,576. Due to uncertainty regarding the completion of tax audits
and possible outcomes, the estimate of obligations related to
unrecognized tax benefits cannot be made. For additional information,
see Note 14, Income Taxes, to the Consolidated Financial Statements. 35




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##### Table of Contents



Liquidity and Capital Resources
 Chapter 11 Filing
 Chapter 11
Bankruptcy Proceedings and Sale Transactions
  Year Ended December 31,2007 to 20082008
    
    
    2007
    
    
    2006
    
    
    ChangeNet cash (used in) provided by:Operating activities
    
    $
    (63,858
    )
    
    $
    (193,295
    )
    
    $
    60,970
    
    
    $
    129,437Investing activities
    
    
    (49,986
    )
    
    
    (36,834
    )
    
    
    65,280
    
    
    
    (13,152
    )Financing activities
    
    
    (567
    )
    
    
    290,566
    
    
    
    (7,316
    )
    
    
    (291,133
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (2,740
    )
    
    
    16,807
    
    
    
    15,297
    
    
    
    (19,547
    )Net increase in cash and cash equivalents
    
    $
    (117,151
    )
    
    $
    77,244
    
    
    $
    134,231
    
    
    $
    (194,395
    )
 Operating Activities.
  Investing Activities.
  Financing Activities.
   36




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Debt Obligations
  Balance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BalanceDecember 31,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    December 31,2007
    
    
    Borrowings
    
    
    Repayments
    
    
    Other(1)
    
    
    2008Convertible debentures
    
    $
    675,611
    
    
    $
    
    
    
    $
    
    
    
    $
    4,910
    
    
    $
    680,521Term Loans under the 2007 Credit Facility
    
    
    297,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    297,750Other
    
    
    1,282
    
    
    
    3,249
    
    
    
    (5,886
    )
    
    
    
    
    
    
    (1,355
    )Total notes payable
    
    $
    974,643
    
    
    $
    3,249
    
    
    $
    (5,886
    )
    
    $
    4,910
    
    
    $
    976,916
 Balance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BalanceDecember 31,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    December 31,2006
    
    
    Borrowings
    
    
    Repayments
    
    
    Other(1)
    
    
    2007Convertible debentures
    
    $
    671,490
    
    
    $
    
    
    
    $
    
    
    
    $
    4,121
    
    
    $
    675,611Term Loans under the 2007 Credit Facility
    
    
    
    
    
    
    300,000
    
    
    
    (2,250
    )
    
    
    
    
    
    
    297,750Other
    
    
    360
    
    
    
    2,853
    
    
    
    (1,931
    )
    
    
    
    
    
    
    1,282Total notes payable
    
    $
    671,850
    
    
    $
    302,853
    
    
    $
    (4,181
    )
    
    $
    4,121
    
    
    $
    974,643
 
 (1)
    
    Other changes in notes payable consist of amortization of notes
payable discount and foreign currency translation adjustments. 2007 Credit Facility
    37




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##### Table of Contents




    
    The affirmative covenantsinclude, among other things: the delivery of unaudited
quarterly and audited annual financial statements, all in accordance with generally accepted
accounting principles; certain monthly operating metrics and budgets; compliance with
applicable laws and regulations (excluding, prior to October 31, 2008, compliance with
certain filing requirements under the securities laws); maintenance of existence and
insurance; after October 31, 2008, as requested by the Administrative Agent, reasonable
efforts to maintain credit ratings; and maintenance of books and records (subject to the
material weaknesses previously disclosed in our Annual Report on Form 10-K for the year
ended December 31, 2005).
    
    The negative covenants, which (subject to exceptions) restrict certain of our corporate
activities, include, among other things, limitations on: disposition of assets; mergers and
acquisitions; payment of dividends; stock repurchases and redemptions; incurrence of
additional indebtedness; making of loans and investments; creation of liens; prepayment of
other indebtedness; and engaging in certain transactions with affiliates.
   Discontinued 2005 Credit Facility
    Guarantees and Indemnification Obligations
   38




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##### Table of Contents



Critical Accounting Policies and Estimates
  
    
    revenue recognition,
    
    valuation of accounts receivable,
    
    valuation of goodwill,
    
    accounting for income taxes,
    
    valuation of long-lived assets,
    
    accounting for leases,
    
    restructuring charges,
    
    legal contingencies,
    
    retirement benefits,
    
    accounting for stock-based compensation,
    
    accounting for intercompany loans, and
    
    accounting for employee global mobility and tax equalization.
  39




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Revenue Recognition
     40




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##### Table of Contents



Valuation of Accounts Receivable
  Valuation of Goodwill
    41




---



##### Table of Contents



Accounting for Income Taxes
         42




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##### Table of Contents



Valuation of Long-Lived Assets
  Accounting for Leases
  Restructuring Charges
  Legal Contingencies
  Retirement Benefits
  43




---



##### Table of Contents



Accounting for Stock-Based Compensation
      44




---



##### Table of Contents



Accounting for Intercompany Loans
  Accounting for Employee Global Mobility and Tax Equalization
  Recently Issued Accounting Pronouncements
      45




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46




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
   Expected Maturity DateYear ended December 31,(In thousands U.S. Dollars, except interest rates)2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter
    
    Total
    
    Fair ValueU.S. Dollar FunctionalCurrency Series AConvertible Subordinated
Debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    250,000
    
    
    $
    250,000
    
    
    $
    62,500Average fixed interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.10
    %
    
    
    3.10
    %U.S. Dollar FunctionalCurrency Series BConvertible Subordinated
Debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    200,000
    
    
    $
    200,000
    
    
    $
    66,260Average fixed interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.10
    %
    
    
    4.10
    %U.S. Dollar FunctionalCurrency Series CConvertible Subordinated
Debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    200,000
    
    
    $
    200,000
    
    
    $
    137,000Average fixed interest
rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.00
    %
    
    
    5.00
    %U.S. Dollar FunctionalCurrencyConvertible Senior
Subordinated Debentures(1)
    
    
    
    
    
    $
    30,521
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    30,521
    
    
    $
    19,832Average fixed interest rate
    
    
    
    
    
    
    0.50
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.50
    %U.S. Dollar FunctionalCurrencyTerm Loans under the 2007
Credit Facility
    
    $
    3,000
    
    
    $
    3,000
    
    
    $
    3,000
    
    
    $
    285,750
    
    
    
    
    
    
    
    
    
    
    $
    294,750
    
    
    $
    112,100Average fixed interest
rate
    
    
    4.94
    %
    
    
    4.94
    %
    
    
    4.94
    %
    
    
    4.94
    %
    
    
    
    
    
    
    
    
    
    
    4.94
    %U.S. Dollar FunctionalCurrencyOther
    
    $
    997
    
    
    $
    648
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,645
    
    
    $
    1,645Average fixed interest
rate
    
    
    7.93
    %
    
    
    6.32
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.30
    %
 
 (1)
    
    The fair value was estimated using the Black-Scholes model with an
expected volatility of 138.7%, risk-free interest rate of 0.1%, an
expected life of 1.5 years, and an expected dividend yield of zero. 47




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Foreign Currency Exchange Risk
   
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    48




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ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Managements Report on Internal Control over Financial Reporting
  Internal Control  Integrated Framework
  Internal Control  Integrated Framework
  49




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##### Table of Contents



Changes in Internal Control over Financial Reporting
  
    
    Implementation of numerous formal management financial review monitoring controls
within the financial statement close and reporting process in our Asia Pacific region,
    
    Strengthening of policies and procedures across the organization, and
    
    The continued adherence to revenue related policies and the maturity of internal
controls over revenue and related revenue accounts.
 Report of Ernst & Young LLP, Independent Registered Public Accounting Firm, on Internal Control
over Financial Reporting
     50




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ITEM 9B. OTHER INFORMATION
  51




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##### Table of Contents



PART III.
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  Reduction
in Size of Board of Directors
    Frederic F. Brace
 F. Edwin Harbach
 Roderick C. McGeary
 Eddie R. Munson,
 52




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##### Table of Contents



Executive Sessions of Non-Management Directors
  Audit Committee
  Compensation Committee Interlocks and Insider Participation
  53




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##### Table of Contents



Standards of Business Conduct
 www.bearingpoint.com
 Committees
  Communications with Board of Directors
  
  Section 16(a) Beneficial Ownership Reporting Compliance
  54




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##### Table of Contents



ITEM 11. EXECUTIVE COMPENSATION
  Compensation Discussion and Analysis
  Bankruptcy Proceedings and Sale of Assets
  Key Employee Incentive Plan
  Changes in Management in 2008
  Rejection of Employment Agreements
with David R. Hunter
  55




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##### Table of Contents



Overall Compensation Philosophy and Objectives
  
 
 
 
 
 How Compensation is Determined
   Accenture Ltd
    
    eBay Inc.
    
    IKON Office Solutions, Inc.ADVO, Inc.
    
    eFunds Corporation
    
    IMS Health IncorporatedAPAC Customer Services, Inc.
    
    Electronic Data Systems Corporation
    
    Iron Mountain Inc.ARAMARK Corporation
    
    EMC Corporation
    
    Kelly Services Inc.Automatic Data Processing, Inc.
    
    Emdeon Corporation
    
    MacDonald Dettwiler & Assoc.Booz Allen Hamilton Inc.
    
    Equifax Inc.
    
    Oracle CorporationCA, Inc.
    
    First Data Corporation
    
    Pitney Bowes Inc.Ceridian Corporation
    
    Fiserv, Inc.
    
    Robert Half International Inc.CheckFree Corporation
    
    G&K Services, Inc.
    
    Symantec CorporationCitiStreet
    
    Gartner, Inc.
    
    TeleTech Holdings Inc.Convergys Corporation
    
    The GEO Group, Inc.
    
    Unisys CorporationDeluxe Corporation
    
    GTECH Holdings Corp
    
    Viad Corp.Dendrite International Inc.
    
    H&R Block, Inc.
 56




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##### Table of Contents



Accenture Ltd
    
    Gartner, Inc.Booz Allen Hamilton Inc.
    
    International Business Machines CorporationCap Gemini U.S.
    
    SAICDeloitte Consulting
    
    Unisys CorporationDiamond Management & Technology Consultants
   Principal Components of Executive Officer Compensation
   Fixed Compensation
 Base Salaries.
 57




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##### Table of Contents



Variable Compensation
 Cash
Awards.
 Long-Term Incentive Compensation
  58




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##### Table of Contents



Performance Share Units.
  Restricted Stock Units.
 Stock Options.
   Other Compensation
 Deferred Compensation Plans.
 Other Benefits.
 Perquisites and Other Compensation.
 Regulatory Considerations
  59




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##### Table of Contents



REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
  BOARD
OF DIRECTORS
 Frederic F. Brace
F. Edwin Harbach
Roderick C. McGeary
Eddie R. Munson
 60




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##### Table of Contents



Summary of Cash and Certain Other Compensation
 .
 Summary Compensation Table
 Non-EquityIncentiveStock
    
    
    Option
    
    
    Plan
    
    
    All OtherName and
    
    
    
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    Compensation
    
    
    TotalPrincipal Position
    
    Year
    
    
    ($)
    
    
    ($)(1)
    
    
    ($)(2)
    
    
    ($)(2)
    
    
    ($)
    
    
    ($)(1)
    
    
    ($)F. Edwin Harbach(3)
    
    
    2008
    
    
    $
    900,214
    
    
    $
    
    
    
    $
    549,930
    
    
    $
    3,401,976
    
    
    $
    
    
    
    $
    625,643
    
    
    $
    5,477,763Chief Executive Officer
    
    
    2007
    
    
    
    686,830
    
    
    
    1,350,046
    
    
    
    1,710,473
    
    
    
    
    
    
    
    
    
    
    
    152,364
    
    
    
    3,899,713David Hunter(4)
    
    
    2008
    
    
    
    323,691
    
    
    
    
    
    
    
    
    
    
    
    375,677
    
    
    
    
    
    
    
    138,424
    
    
    
    837,792Chief Operating OfficerKenneth A. Hiltz(5)
    
    
    2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Chief Financial OfficerEddie R. Munson(6)
    
    
    2008
    
    
    
    405,515
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    912
    
    
    
    406,427Former Interim Chief Financial
OfficerJudy A. Ethell(7)
    
    
    2008
    
    
    
    303,388
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,102
    
    
    
    374,490Former Chief Financial
    
    
    2007
    
    
    
    520,094
    
    
    
    260,047
    
    
    
    1,500,626
    
    
    
    379,396
    
    
    
    
    
    
    
    78,579
    
    
    
    2,738,742Officer
    
    
    2006
    
    
    
    500,000
    
    
    
    500,000
    
    
    
    690,700
    
    
    
    1,131,000
    
    
    
    
    
    
    
    3,797
    
    
    
    2,825,497Eileen A. Kamerick
    
    
    2008
    
    
    
    37,151
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,151Former Chief Financial OfficerLaurent C. Lutz
    
    
    2008
    
    
    
    600,142
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,245
    
    
    
    612,387Former
Chief Legal Officer and
    
    
    20072006
    
    
    
    520,094411,059
    
    
    
    635,0471,311,059
    
    
    
    1,418,690
    
    
    
    
    
    
    
    525,000525,000
    
    
    
    10,77778,431
    
    
    
    3,109,6082,325,549Secretary
 
 (1)
    
    Unless otherwise noted, Bonus amounts consist of performance-based cash bonuses accrued in the fiscal year for which the bonus has been earned. We have entered
into employment agreements with Mr. Harbach and Mr. Lutz that set forth the terms of their compensation. Ms. Ethell also had employment agreements that set forth the
terms of their compensation. All Other Compensation does not include matching contributions to be made by the Company under the 401(k) Plan for 2008, since these
amounts are not finalized for payment until the following year.(2)
    
    Amounts reflected in the table as 2008 equity compensation reflect the amount recognized for financial statement reporting purposes in 2008 in accordance with SFAS
123(R) for equity award expense. These amounts reflect the Companys accounting expense for these awards, and do not correspond to the actual value that may be
recognized by the named executive officers. Whether and to what extent a named executive officer realizes value will depend on various factors, including actual
operating performance, stock price fluctuations and the named executive officers continued employment. For a discussion of the assumptions used by the Company in
calculating these amounts, see Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operation  Accounting for Stock-Based
Compensation, and Note 13, Stock-Based Compensation, of the Notes to Consolidated Financial Statements. For information regarding 2008 Stock Awards and Option
Awards, see  Grants of Plan-Based Awards below.(3)
    
    Mr. Harbachs annual base salary for 2008 was
$900,214. Mr. Harbachs All Other Compensation
consists of $129,600 in reimbursements for costs associated with a furnished
apartment in New York City for Mr. Harbachs use (monthly
rental cost of $10,800), and $496,043 in tax equalization payments as 61




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##### Table of Contents



part of the Companys tax equalization programs provided to all employees
with respect to reimbursement of certain state taxes paid by an employee for work performed outside
his or her state of residence. The significantly higher
tax equalization payments in 2008 resulted from Mr. Harbach spending much of the year in New York City due to the various strategic initiatives pursued by the
Company. For additional information regarding Mr. Harbachs employment
arrangements, see  Employment Agreements  Employment Agreement for F. Edwin Harbach.(4)
    
    Mr. Hunters 2009 base compensation will continue to be $750,000, the initial value of Mr. Hunters total base compensation in 2008; however, his compensation in
2009 will be paid in cash rather than in a combination of cash and stock options. Mr. Hunter was paid a base salary of $343,724 AUD (Australia Dollars) in 2008. The
figure listed in the Salary column above is based upon a conversion rate as of March 13, 2008 (the date on which Mr. Hunters 2008 base salary was set). Mr.
Hunters All Other Compensation consists of $87,970 in tax equalization payments with respect to the reimbursement of certain taxes paid by Mr. Hunter resulting
from work performed outside his country of residence and $50,454 for the reasonable travel expenses of Mr. Hunters spouse, pursuant to Mr. Hunters employment agreement.(5)
    
    Effective November 11, 2008, the Company appointed Mr. Hiltz, a managing director of AlixPartners, LLP, as the Companys Chief Financial Officer. Mr. Hiltz is a
temporary employee of the Company, receives no compensation directly from the Company and does not participate in the Companys employee benefit plans. For
additional information, see Item 13 Certain Relationships and Related Transactions, and Director Independence  Related Transactions-AlixPartners.(6)
    
    Mr. Munsons annual salary for 2008 was $900,000. Mr. Munsons All Other Compensation consists of $912 in tax equalization payments with respect to the
reimbursement of certain state taxes paid by Mr. Munson resulting from work performed outside his state of residence.(7)
    
    Effective as of May 13, 2008, Ms. Ethell no longer held the positions of Chief Financial Officer and Chief Accounting Officer and as of August 1, 2008, she is no
longer an employee of the Company. Ms. Ethells All Other Compensation consists of (i) $1,102 in tax equalization payments with respect to the reimbursement of
certain state taxes paid by Ms. Ethell resulting from work performed outside her state of residence and (ii) pursuant to Ms. Ethells Separation and Release of
Claims Agreement, dated May 12, 2008, (A) Ms. Ethell was to be paid $70,000 in settlement of her personal and vacation days that were accrued but unused as of July
31, 2008, (B) $1,040,000 as a severance payment (equaling Ms. Ethells annual base salary and target bonus), and (C) $700,000 as an additional lump sum payment for
her continued service through July 31, 2008. Currently, amounts under (B) and (C) above have not been paid to Ms. Ethell.(8)
    
    Effective as of the close of business on December 31, 2008, Mr. Lutz no longer held the positions of Chief Legal Officer and Secretary. Mr. Lutz entered into an
independent contractor agreement with the Company where he is compensated on an hourly basis of $350.00 per hour from the period of January 1, 2009 to February 15,
2009, for which he earned $58,275. Mr. Lutz will also receive certain reasonable out-of-pocket expenses that he incurs. Mr. Lutzs All Other Compensation
consists of $12,245 in tax equalization payments with respect to the reimbursement of certain state taxes paid by Mr. Lutz resulting from work performed outside his
state of residence. 62




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##### Table of Contents



Grants of Plan-Based Awards
  All Other
    
    All OtherStock
    
    Option
    
    
    
    
    
    Grant DateAwards:
    
    Awards:
    
    Exercise
    
    Fair ValueEstimated Future Payouts
    
    Number of
    
    Number of
    
    or Base
    
    of StockEstimated Future Payouts
    
    Under Equity Incentive
    
    Shares of
    
    Securities
    
    Price of
    
    andCompensation
    
    Under Non-Equity Incentive Plan Awards
    
    Plan Awards
    
    Stock
    
    Underlying
    
    Option
    
    OptionGrant
    
    Committee
    
    Threshold
    
    Target
    
    Maximum
    
    Threshold
    
    Target
    
    Maximum
    
    or Units
    
    Options
    
    Awards
    
    AwardsName
    
    Date
    
    Approval Date
    
    ($)
    
    ($)
    
    ($)
    
    (#)
    
    (#)
    
    (#)
    
    (#)
    
    (#)
    
    ($/Sh)
    
    ($)(1)F. Edwin Harbach (2)
    
    
    1/2/2008
    
    
    
    12/31/2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,985
    
    
    
    24,652
    
    
    
    138.00
    
    
    $
    3,951,906David Hunter ( 3)
    
    
    3/13/2008
    
    
    
    3/13/2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,700
    
    
    
    83.00
    
    
    
    2,465,1004/1/2008
    
    
    
    3/13/2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,926
    
    
    
    85.50
    
    
    
    164,6737/1/2008
    
    
    
    3/13/2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,926
    
    
    
    39.50
    
    
    
    76,07710/1/2008
    
    
    
    3/13/2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,926
    
    
    
    24.00
    
    
    
    46,244Kenneth A. Hiltz
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Eddie R. Munson
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Judy A. Ethell
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Eileen A. Kamerick
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Laurent C. Lutz
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 *
    
    Please note that the securities listed in the above table and expected vesting schedules do not
take into account the Companys reorganization plan wherein it is contemplated that all outstanding
equity of the Company will be cancelled for no consideration.(1)
    
    Amounts reflected in the Grant Date Fair Value of Stock and Option
Awards column reflect the amount recognized for financial statement
purposes in 2008 in accordance with SFAS 123(R) for equity award
expense. These amounts reflect the Companys accounting expense for
these awards, and do not correspond to the actual value that may be
recognized by the named executive officers. Whether and to what extent
a named executive officer realizes value will depend on various
factors, including actual operating performance, stock price
fluctuations and the named executive officers continued employment.
For a discussion of the assumptions used by the Company in calculating
these amounts, see Item 7, Managements Discussion and Analysis of
Financial Condition and Results of Operation  Accounting for
Stock-Based Compensation, and Note 13, Stock-Based Compensation, of
the Notes to Consolidated Financial Statements.(2)
    
    Mr. Harbach received a grant of 3,985 RSUs on January 2, 2008, and 996
RSUs vested on January 2, 2009 and 996 RSUs will vest on January 2 of
each of 2010 and 2011 and 997 RSUs will vest on January 2, 2010. Mr.
Harbach also received a grant of 24,652 options on January 2, 2008,
25% of which vested on January 2, 2009 and 25% of which will vest on
each of January 2, 2010, 2011 and 2012.(3)
    
    Mr. Hunter was granted (i) 29,700 options on March 13, 2008 at an
exercise price of $83.00 per share, 25% of which vest on each of March
13, 2009, 2010, 2011 and 2012, (ii) 1,926 options on April 1, 2008 at
an exercise price of $85.50 per share, 100% of which vested on
December 31, 2008, (iii) 1,926 options on July 1, 2008 at an exercise
price of $39.50 per share, 100% of which vested on December 31, 2008
and (iv) 1,926 options on October 2008 at an exercise price of $24.00
per share, 100% of which vested on December 31, 2008, in connection
with his employment arrangements. 63




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##### Table of Contents



Outstanding Equity Awards at Fiscal Year-End (December 31, 2008)
  Option Awards
    
    Stock Awards(1)Equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity
    
    EquityIncentive
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Incentive Plan
    
    Incentive PlanPlan
    
    
    
    
    
    
    
    
    
    
    
    
    
    Market
    
    Awards:
    
    Awards:Awards:
    
    
    
    
    
    
    
    
    
    
    
    
    
    Value of
    
    Number of
    
    Market orNumber of
    
    Number of
    
    Number of
    
    
    
    
    
    
    
    
    
    Number of
    
    Shares or
    
    Unearned
    
    Payout Value ofSecurities
    
    Securities
    
    Securities
    
    
    
    
    
    
    
    
    
    Shares or
    
    Units of
    
    Shares, Units
    
    UnearnedUnderlying
    
    Underlying
    
    Underlying
    
    
    
    
    
    
    
    
    
    Units of
    
    Stock
    
    or Other
    
    Shares, Units orUnexercised
    
    Unexercised
    
    Unexercised
    
    Option
    
    Option
    
    Stock That
    
    That Have
    
    Rights That
    
    Other RightsOptions(#)
    
    Options(#)
    
    Unearned
    
    Exercise
    
    Expiration
    
    Have Not
    
    Not
    
    Have Not
    
    That Have NotName
    
    Exercisable
    
    Unexercisable
    
    Options(#)
    
    Price($)
    
    Date
    

Vested(#)
    
    Vested($)
    
    Vested(#)
    
    Vested($)F. Edwin Harbach(2)
    
    
    
    
    
    
    24,652
    
    
    
    
    
    
    $
    138.00
    
    
    
    1/2/2018
    
    
    
    17,310
    (2)
    
    $
    16,027
    
    
    
    
    
    
    $
    David Hunter(3)
    
    
    
    
    
    
    29,700
    
    
    
    
    
    
    
    83.00
    
    
    
    3/13/2018
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,926
    
    
    
    
    
    
    
    
    
    
    
    85.50
    
    
    
    4/1/20181,926
    
    
    
    
    
    
    
    
    
    
    
    39.50
    
    
    
    7/1/20181,926
    
    
    
    
    
    
    
    
    
    
    
    24.00
    
    
    
    10/1/2018Kenneth A. Hiltz
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Eddie R. Munson
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Judy A. Ethell(4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Eileen A. Kamerick
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Laurent C. Lutz(5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 *
    
    Please note that the securities listed in the above table and expected vesting schedules do not
take into account the Companys reorganization plan wherein it is contemplated that all outstanding
equity of the Company will be cancelled for no consideration.(1)
    
    Due to the terms of the PSUs and the fact that no determinations
regarding the vesting of PSUs can be made until December 31, 2009, PSU
awards are not included in this table. The Company determined the
performance-based metrics are not probable of achievement.(2)
    
    Mr. Harbach was granted 24,652 options to purchase common stock on
January 2, 2008, 6,163 options will vest on each of January 2, 2009,
2010, 2011 and 2012. Mr. Harbach received a grant of 17,766 RSUs on
January 8, 2007, of which 4,441 RSUs vested on January 8, 2008 and
4,442 RSUs vested on January 8, 2009 (but for the purposes of the
table above are not considered as exercisable as they did not vest
by December 31, 2008) and of which 4,441 RSUs will vest on January 8,
2010 and 4,442 RSUs will vest on January 8, 2011. In addition, Mr.
Harbach received a grant of 3,985 RSUs on January 2, 2008, and 996
RSUs vested on January 2, 2009 (but for the purposes of the table
above are not considered as exercisable as they did not vest by
December 31, 2008) and 996 RSUs will vest on January 2 of each of 2010
and 2011 and 997 RSUs will vest on January 2, 2010. For information
regarding these grants, see Footnote 1 to  Grants of Plan-Based
Awards above.(3)
    
    Mr. Hunter was granted 29,700 options on March 13, 2008, 7,425 of
which vested on March 13, 2009 (but for the purposes of the table
above are not considered as exercisable as they did not vest by
December 31, 2008) and 7,425 of which will vest on March 13 of each of
2010, 2011 and 2012. Mr. Hunter was also granted 1,926 options on
each of April 1, 2008, July 1, 2008 and October 1, 2008, all of which
vested on December 31, 2008. For information regarding these grants,
see Footnote 1 to  Grants of Plan-Based Awards above.(4)
    
    Pursuant to the Separation and Release of Claims Agreement, executed
by Ms. Ethell and the Company, all outstanding equity awards granted
to Ms. Ethell were accelerated. A total of 1,054 RSUs were
accelerated pursuant to the terms of such agreement on July 1, 2008.
Ms. Ethells stock options all expired as of October 31, 2008.(5)
    
    Upon Mr. Lutzs resignation from the Company, effective as of the
close of business on December 31, 2008, Mr. Lutz forfeit all
outstanding RSUs and PSUs that had been granted to him. 64




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##### Table of Contents



Option Exercises and Stock Vested
  Option Awards
    
    Stock AwardsNumber of Shares
    
    
    
    Number of SharesAcquired on
    
    Value Realized
    
    Acquired on
    
    Value RealizedName
    
    Exercise(#)
    
    on Exercise($)
    
    Vesting(#)
    
    on Vesting($)(1)F. Edwin Harbach
    
    
    
    $
    
    
    4,441
    
    
    $
    557,346David Hunter
    
    
    
    
    
    
    5,778
    
    
    
    7,800Kenneth A. Hiltz
    
    
    
    
    
    
    
    
    
    
    Eddie R. Munson
    
    
    
    
    
    
    
    
    
    
    Judy A. Ethell (2)
    
    
    
    
    
    
    2,108
    
    
    
    83,266Eileen A. Kamerick
    
    
    
    
    
    
    
    
    
    
    Laurent C. Lutz
    
    
    
    
    
    
    732
    
    
    
    988
 
 (1)
    
    Amounts reflect the value of awards realized by the named executive
officer and are computed by multiplying the number of vested shares by
the closing price of the Companys stock on the date of vesting.(2)
    
    Effective as of July 31, 2008, all and options and RSUs granted in Ms.
Ethell employment agreements were accelerated pursuant to a separation
and release of claims agreement. Pension Benefits
  Nonqualified Deferred Compensation Plans
  Employment Agreements
 Managing Director Agreements.
  Employment Agreement for F. Edwin Harbach.
 65




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
    
    Termination of Prior Agreements.Effective as of December 31, 2007, Mr. Harbachs
previous employment agreement, Managing Director Agreement and Special Termination Agreement
were terminated. Mr. Harbachs annual base salary and bonus compensation for 2007 can be
found in the Summary Compensation Table above, and information regarding his equity awards
are included under  Outstanding Equity Awards at Fiscal Year-End (December 31, 2007), in
each instance pursuant to his previous employment agreement.
    
    Compensation.Mr. Harbachs compensation for 2009 will be:
 
    
    Mr. Harbachs annual base salary for 2009 is $900,214. In addition, in 2009,
Mr. Harbach will be eligible for an annual performance bonus with a target amount of 100%
of his annual base salary for the year with respect to which the performance bonus is
being awarded, based on his ability to achieve all performance objectives as established
for the applicable year by the Committee.
    
    On January 2, 2008, Mr. Harbach received a grant of 3,986 RSUs and a grant of stock
options pursuant to the LTIP, with an exercise price of $138.00 per share, to purchase
24,652 shares of common stock of the Company. The RSUs and the stock options vest in equal
25% increments on each of the next four anniversary dates of such grant date, provided
that Mr. Harbachs employment has not terminated prior to such date. Furthermore, all of
the RSUs will vest upon the termination of Mr. Harbachs employment due to his death,
disability or retirement.
    
    Effective as of December 31, 2007, the terms of Mr. Harbachs prior RSU grant of
17,766 restricted stock units awarded to him in January 2007 was amended to provide that
in the event of a Change in Control (as defined in the LTIP), the RSUs will become 100%
vested and nonforfeitable effective as of the date of such Change in Control, provided
that Mr. Harbachs employment has not terminated prior to such date. This amendment
conforms the vesting of the RSUs upon a change in control to that contained in all other
RSU awards granted by the Company. Previously, the RSUs would have vested only upon (i) a
Change in Control and (ii) Mr. Harbachs termination by the Company for any reason other
than for cause within three years following a Change in Control.
    
    Living Expenses.Mr. Harbach will be reimbursed for monthly rental payments for his
current apartment lease in New York City. The Committee of the Board will review its
decision to provide this reimbursement at each lease renewal date, which is set to end in
September 2009.
    
    Indemnification.We agreed to indemnify Mr. Harbach with respect to his activities on
behalf of the Company to the fullest extent permitted by law and the Companys Articles of
Incorporation.
    
    Termination Payments.Mr. Harbach is entitled to certain termination payments under
his employment agreement, which are described below under Potential Payments upon
Termination of Employment or Change in Control.
  
    
    Managing Director Agreement.Mr. Harbachs Managing Director Agreement is the standard
form currently utilized for all new managing directors of the Company. The Managing Director
Agreement contains non-competition and non-solicitation provisions that apply for a period
of two years after his termination or resignation.
    
    Special Termination Agreement.The term of Mr. Harbachs Special Termination Agreement is
three years (subject to potential one-year extensions) or, if longer, two years after a
Change in Control. If, after a Change in Control and during the term of the Special
Termination Agreement, the Company terminates Mr. Harbachs employment other than for Cause
or Disability (as defined in the Special Termination Agreement) or if he terminates his
employment within 60 days after any decrease of his base salary by 20% or more after such
Change in Control, Mr. Harbach is entitled to certain benefits, including the payment of
approximately one years compensation (based on salary plus potential bonus).
 Employment
Agreement for David R. Hunter.
 66




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##### Table of Contents




    
    Compensation.Mr. Hunters compensation for
2009 was:
 
    
    Mr. Hunters annual base salary for 2009 was $750,000. In addition, in 2009,
Mr. Hunter was eligible for an annual performance bonus with a target amount of 100%
of his annual base salary for the year with respect to which the performance bonus is
being awarded, based on his ability to achieve all performance objectives as established
for the applicable year by the Committee.
    
    The Company granted to Mr. Hunter the following stock options to purchase shares of
common stock of the Company pursuant to the Companys 2000 Long-Term Incentive Plan (the
LTIP):
 
    
    Effective as of March 13, 2008, Mr. Hunter was granted stock options to purchase
29,700 shares of common stock (accounting for the reverse stock split) of the Company,
with an exercise price of $83.66 per share. On March 13, 2009, 25% of these stock
options vested and the remainder will vest in equal 25% increments on each of the next
three anniversary dates of such grant date.
    
    In addition, as part of his 2008 compensation, on each of April 1, 2008, July 1,
2008 and October 1, 2008, Mr. Hunter was granted stock options to purchase 1,926, 1,926
and 1,926 shares of common stock (accounting for the reverse stock split) of the
Company, respectively, as he was an employee of the Company on such dates, with an
exercise price per share equal to the closing price of the Companys common stock on the
New York Stock Exchange on such grant dates. Each of these stock options vested on
December 31, 2008.
 All unvested stock options will vest as of the date of any Change in Control (as
defined in the LTIP).
 
    
    Benefits/Long-Term Incentives. Mr. Hunter was entitled to participate in all employee
benefit (including long-term incentive), fringe and perquisite plans, practices, programs,
policies and arrangements generally provided to executives of the Company at a level
commensurate with his position and location.
    
    Living Expenses.The Company agreed to provide reasonable living accommodations for
Mr. Hunter during extended stay periods at the Companys New York, New York location. In
addition, the Company agreed to reimburse Mr. Hunter for the reasonable travel expenses
of his spouse, up to four times per year, while Mr. Hunter is on Company business.
    
    Severance. Upon termination of Mr. Hunters employment by the Company other than Summary
Termination (as defined in Mr. Hunters Managing Director Agreement), and in lieu of any
amounts payable under Mr. Hunters Managing Director Agreement, the Company will pay to Mr.
Hunter, within 30 days after the Companys receipt of a fully executed release, a lump sum
cash payment in the amount of $1,500,000 USD.
    
    Indemnification. The Company agreed to indemnify Mr. Hunter with respect to his
activities on behalf of the Company to the fullest extent permitted by law and the Companys
Certificate of Incorporation.
  
    
    Managing Director Agreement. Effective as of March 13, 2008, the Company and Mr. Hunter
entered into a Managing Director Agreement that contains non-competition and
non-solicitation provisions for a period of two years after his termination or resignation.
    
    Special Termination Agreement. Effective as of March 13, 2008, the Company and Mr. Hunter
entered into a Special Termination Agreement. The term of the Special Termination Agreement
was three years (subject to potential one-year extensions) or, if longer, two years after a
Change in Control. If, after a Change in Control and during the term of the Special
Termination Agreement, the Company terminates Mr. Hunters employment other than as a
Summary Termination (as defined in the Managing Director Agreement) or for Disability (as
defined in the Special Termination Agreement) or if he terminates his employment within
60 days after any decrease of his base salary by 20% or more after such Change in Control,
Mr. Hunter is entitled to certain benefits, including a lump sum cash payment of $1,500,000
USD.
 Judy A. Ethell.
 67




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
    
    Lump Sum Payment. Ms. Ethell was scheduled to receive a payment in the amount of
$1,740,000 to be paid in a lump sum on or about February 1, 2009. This amount has not yet
been paid. We expect that Ms. Ethell will have a claim as an unsecured creditor with
respect to such payment and that she will file such claim with the Bankruptcy Court.
    
    Restricted Stock Units.On July 1, 2008, all of Ms. Ethells RSUs that were scheduled to
vest on July 1, 2009 vested. As such, as of July 31, 2008, all 7,720 RSUs granted in Ms.
Ethells two RSU agreements (taking into account the reverse stock split) had vested.
    
    Stock Options.On July 1, 2008, Ms. Ethells stock options that were scheduled to vest
on July 1, 2009 pursuant to the BearingPoint Stock Option Agreement and the terms of Ms.
Ethells September 19, 2006 Award Notice vested.
    
    Change of Control Payment.If we had experienced a change of control prior to January
31, 2009, we would have had to make a lump sum payment of $1,400,000 to Ms. Ethell. As no
such change of control occurred, Ms. Ethell did not receive any payments pursuant to this
provision.
    
    Release of Claims.In consideration of the above listed payments and actions, Ms. Ethell
has agreed to release us of all claims (other than those limited types of claims expressly
set forth in the agreement) related to her employment, including amounts potentially owed to
Ms. Ethell pursuant to her existing employment arrangements.
 Potential Payments upon Termination or Change of Control
 Severance Payments under Managing Director Agreements.
 Severance Payments under Employment Agreements.
 Termination Payments under Special Termination Agreements.
  68




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Potential Payments
Upon Termination of Employment or Change-in-Control
as of December 31, 2008
  
    
    the named executive officers employment were terminated by us without Cause (as
defined in such named executive officers employment agreement) or by the named executive
officer for Good Reason (as defined in such named executive officers employment
agreement); and
    
    the named executive officers employment (a) were terminated by us within two years after
a Change in Control (as defined in such named executive officers Special Termination
Agreement) for any reason other than Cause (as defined in such named executive officers
Special Termination Agreement) or if the executive became permanently disabled or was unable
to work for a period of 180 consecutive days, (b) (i) were involuntarily terminated by us
(other than for Cause) or (ii) were terminated by the named executive officer following a
reduction or adverse change in the named executive officers duties or compensation, in each
case within six months prior to a Change in Control and in anticipation of a Change in
Control or (c) were terminated by the named executive officer during the term of the Special
Termination Agreement but after a Change in Control if one of the events specified in such
named executive officers Special Termination Agreement has occurred.
 Termination of
    
    Change inName
    
    Employment(1)(2)
    
    Control(2)(3)F. Edwin Harbach
    
    $
    3,739,198
    (4)
    
    
    1,841,392
    (5)David R. Hunter
    
    
    1,536,812
    (6)
    
    
    2,070,591
    (7)
 
 *
    
    The Company has not provided information regarding Ms. Kamerick as she
is no longer an employee of the Company and was not paid any
termination fees upon her resignation as Chief Financial Officer.
Upon Ms. Kamericks resignation, all her employment arrangements were
terminated, including the Managing Director Agreement and Special
Termination Agreement. Mr. Munson is no longer acting as Chief
Financial Officer of the Company and was not a party to any employment
or change of control agreements and, as such, would not receive any
amounts upon his termination of employment or upon a change of control
of the Company. Mr. Hiltz is also not a party to any employment or
change of control agreements and therefore will not receive any
amounts upon a termination of employment or a change of control of the
Company. Mr. Lutz did not receive any additional compensation upon
his resignation of employment, effective as of the close of business
on December 31, 2008. Ms. Ethell executed a Separation and Release of
Claims Agreement on May 12, 2008. For more information about payments
made to Ms. Ethell, please see Employment Agreements- Judy Ethell
and Footnote 7 to the Summary Compensation Table above.(1)
    
    Amounts set forth in the table for Messrs. Harbach and Hunter reflect
the severance payments payable under their respective employment
agreements. If Messrs. Harbach and Hunters employment is not
terminated (i) by us without Cause (as defined in such named
executive officers employment agreement) or (ii) by the named
executive officer for Good Reason (as defined in such named
executive officers employment agreement), then such named executive
officer may still be eligible to receive payments representing earned
but unpaid salary and bonus amounts, any unpaid accrued personal days
or unreimbursed business expenses and any other amounts due under the
Companys benefit plans. If Messrs. Harbach and Hunter does not
qualify for payment under any of the provisions of their respective
employment agreements, they may be eligible to receive severance
payments under their respective Managing Director Agreements if their
employment is terminated other than for Cause (as defined in the
respective Managing Director Agreement) or for no reason. In Mr.
Harbachs case, such payment would generally consist of all earned and
unpaid base salary plus a payment equal to three months pay at his
current base salary. In the case of Mr. Hunter, under his agreement,
he would be only be entitled to all earned and unpaid base salary and
any accrued but untaken annual leave. Amounts payable under the
Managing Director Agreements for Messrs. Harbach and Hunter as of
December 31, 2008 would have been $225,054 and $36,812, respectively.(2)
    
    The dollar amounts in the table with respect to RSUs and PSUs that
accelerate upon a termination, Change in Control or other triggering
event assume a $1.35 per share price for our common stock (the closing
price on December 31, 2008).(3)
    
    Amounts set forth in the table for Messrs. Harbach and Hunter reflect
the termination payments payable governed under their respective
Special Termination Agreements upon a Change of Control (as defined in
such agreements). Even if Messrs. Harbach or Hunter is not eligible to
receive the payments set forth in the table above upon a change in
control (as defined in the Special Termination Agreements), all
unvested options and RSUs held will immediately vest upon the
occurrence of a Change of Control 69




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(as defined under the LTIP) pursuant
to such named executive officers employment agreement. In addition,
the Change of Control provisions under the LTIP generally provide that
any unvested portion of stock option grants and RSUs will vest upon
the occurrence of a Change of Control (as defined in the LTIP). See
Change of Control Provisions Under the LTIP below. Furthermore, if
such named executive officer is not eligible to receive the payments
and other benefits specified in his or her Special Termination
Agreement upon a change in control, such named executive officer may
be eligible to receive the payments payable upon termination of
employment under such individuals employment agreement, as specified
in this table and the related footnotes.(4)
    
    Under Mr. Harbachs employment agreement in effect as of December 31,
2008, Mr. Harbach would have been entitled to the following:
(i) payment equal to two times the sum of his (A) annual base salary
($900,214) and (B) bonus compensation of $900,214, (ii) payment of
accrued and unused personal days ($116,461), (iii) payment of premiums
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended for a period of 18 months after termination ($14,540), and
(iv) the vesting of an additional 5,438 RSUs that would have vested
within the first anniversary of the termination date ($7,341).(5)
    
    Under Mr. Harbachs Special Termination Agreement in effect as of
December 31, 2008, Mr. Harbach would have been entitled to the
following: (i) payment equal to the sum of his (A) annual base salary
in 2008 ($900,214) and (B) bonus compensation of $900,214, (ii) for a
period of 2 years after his termination, continuation of medical,
dental, life insurance, disability, accidental death and dismemberment
benefits and other welfare benefits, subject to certain exceptions
($17,595), (iii) pursuant to the terms of Mr. Harbachs RSU grant, in
the event of a Change in Control, the vesting of all unvested RSUs (an
additional 17,310 RSUs valued at $23,369), (iv) reimbursement for
outplacement services and (v) payment of any earned but unpaid salary,
bonus or incentive compensation.(6)
    
    Under Mr. Hunters employment agreement, Mr. Hunter would have been
entitled to (i) payment equal to the sum of $1,500,000, (ii) payment
of accrued and unused personal days ($36,812), and (iii) the vesting
of an additional 35,478 options that would have vested within the
first anniversary of the termination date ($0).(7)
    
    Under Mr. Hunters Special Termination Agreement, Mr. Hunter would
have been entitled to the following: (i) payment equal to the sum of
$1,500,000, (ii) for a period of 2 years after his termination,
continuation of medical, dental, life insurance, disability,
accidental death and dismemberment benefits and other welfare
benefits, subject to certain exceptions ($17,595), (iii) pursuant to
the terms of Mr. Hunters option grant, in the event of a Change in
Control, the vesting of all unvested options (an additional 35,478
options valued at $0), (iv) reimbursement for outplacement services,
(v) payment of any earned but unpaid salary, bonus or incentive
compensation and (vi) an additional tax gross-up payment of
$552,996. Change of Control Provisions Under the LTIP.
 Managing Director Compensation Plan
  70




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Director Compensation
   
    
    an annual fee of $40,000;
    
    a meeting fee of $2,000 for attendance in person at any meeting of the Board or a
committee of the Board and $1,000 for attendance by telephone (members of the Audit
Committee are paid $2,000 for attendance at any Audit Committee meeting, whether they
attended in person or by telephone);
    
    a fee of $40,00 to each of Messrs. Lord and McGeary and a fee of $50,000 to Mr. Strange
for their participation in a Special Committee of the Board;
    
    a grant of stock options to purchase up to 300 shares of common stock upon initial
election to the Board; and
    
    a grant of stock options to purchase up to 100 shares of common stock upon initial
election as the Chair of the Audit Committee.
     71




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2008 Director Compensation Table
 Fees Earnedor Paidin Cash
    
    Stock Awards
    
    Option Awards
    
    TotalName*
    
    ($)(1)
    
    ($)(5)
    
    ($)(5)(6)
    
    ($)Douglas C. Allred
    
    $
    88,000
    
    
    $
    
    
    
    $
    
    
    
    $
    88,000Betsy J. Bernard
    
    
    86,000
    
    
    
    
    
    
    
    
    
    
    
    86,000Frederic F. Brace(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Jill S. Kanin-Lovers
    
    
    88,000
    
    
    
    
    
    
    
    
    
    
    
    88,000Wolfgang H. Kemna
    
    
    81,000
    
    
    
    
    
    
    
    
    
    
    
    81,000Albert L. Lord
    
    
    125,000
    
    
    
    
    
    
    
    
    
    
    
    125,000Roderick C. McGeary(3)
    
    
    261,000
    
    
    
    
    
    
    
    
    
    
    
    261,000Eddie R. Munson
    
    
    77,000
    
    
    
    
    
    
    
    
    
    
    
    77,000J. Terry Strange
    
    
    151,000
    
    
    
    
    
    
    
    
    
    
    
    151,000Spencer C. Fleischer(4)
    
    
    69,000
    
    
    
    
    
    
    
    
    
    
    
    69,000
 
 *
    
    For information regarding the current composition of our
Board, please see Item 10  Reduction in Size of
Board of Directors above.(1)
    
    Unless otherwise noted, Fees Earned or Paid in Cash amounts consist of amounts paid for Board service rendered in 2008.(2)
    
    Effective as of January 1, 2009, Frederic F. Brace was appointed to the Board as a Class III Director and, as such,
received no compensation for service in 2008.(3)
    
    On January 1, 2008, the Compensation Committee of the Board approved an annual fee of $150,000 payable to Mr. McGeary,
as compensation for his ongoing services as Chairman of the Board. This fee is in addition to the $40,000 annual fee
payable to the Companys non-employee directors.(4)
    
    Mr. Fleischer resigned from the Board effective July 15, 2008.(5)
    
    No awards of stock or options were granted to the directors for their service on the Board in 2008.(6)
    
    Outstanding equity awards for each non-employee director is as follows (for a complete description of the beneficial
ownership by our directors, see  Security Ownership of Certain Beneficial Owners and Management): Outstanding
    
    OutstandingStock Awards at
    
    Option Awards atDecember 31,
    
    December 31,Name
    
    2008(1)
    
    2008Douglas C. Allred
    
    
    880
    
    
    
    300Betsy J. Bernard
    
    
    640
    
    
    
    300Frederic F. Brace(2)
    
    
    
    
    
    
    Jill S. Kanin-Lovers
    
    
    160
    
    
    
    300Wolfgang H. Kemna
    
    
    880
    
    
    
    300Albert L. Lord
    
    
    800
    
    
    
    300Roderick C. McGeary(3)
    
    
    4,230
    
    
    
    9,458Eddie R. Munson
    
    
    160
    
    
    
    300J. Terry Strange
    
    
    800
    
    
    
    400
 
 (1)
    
    No awards of stock or options were granted to the directors for their service on the Board in 2008.(2)
    
    Effective as of January 1, 2009, Frederic F. Brace was appointed to the Board as a Class III
Director and as part of his appointment received 300 option awards.(3)
    
    Mr. McGearys outstanding stock awards consist of (i) 2,430 Founders shares, (ii) 600 shares due
to purchases on December 5, 2007, (iii) 101 shares due to a settlement of 147 RSUs on December 12,
2007, subtracting 46 for net share delivery, (iv) 398 shares due to a settlement of 583 RSUs on
July 1, 2008, subtracting 185 for net share delivery, (v) 301 shares due to a settlement of 441
RSUs on July 1, 2008, subtracting 140 for net share delivery and (vi) 400 shares of restricted
stock issued to Mr. McGeary for his service on the Board. Mr. McGearys outstanding option awards
consist of (i) 158 options, granted on June 30, 2000, at an exercise price of $2,775.50 per share,
all of which vested on June 30, 2001, (ii) 300 options, granted on April 24, 2001, at an exercise
price of $819.00 per share, all of which vested on April 24, 2002, and (iii) 9,000 options,
granted on November 19, 2004, at an exercise price of $450.00 per share, 50% of which vested on
March 21, 2005 and 50% of which vested on March 21, 2006. 72




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73




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ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 Beneficial Ownership of More Than Five Percent
  Common StockPercentage ofName and Address of 5% Holders of Common Stock
    
    Number of Shares
    
    Shares OutstandingGlenview Capital Management, LLC(1)
    
    
    606,681
    
    
    
    13.7
    %767 Fifth Avenue, 44th Floor
New York, NY 10153Ariel Investments, LLC (2)
    
    
    522,482
    
    
    
    11.8
    %200 E. Randolph Drive, Suite 2900
Chicago, IL 60601Silver Point Capital, L.P.(3)
    
    
    399,977
    
    
    
    9.1
    %Two Greenwich Plaza
Greenwich, CT 06830Thornburg Investment Management, Inc.(4)
    
    
    360,068
    
    
    
    8.2
    %119 E. Marcy Street
Santa Fe, NM 87501Tracer Capital Management L.P.(5)
    
    
    316,986
    
    
    
    7.2
    %540 Madison Avenue, 33rd Floor
New York, NY 10022Whitebox Advisors, LLC(6)
    
    
    278,213
    
    
    
    6.3
    %3033 Excelsior Boulevard, Suite 300
Minneapolis, MN 55416Franklin Resources, Inc.(7)
    
    
    248,707
    
    
    
    5.6
    %One Franklin Parkway
San Mateo, CA 94403-1906
 
 (1)
    
    Represents shares beneficially held by Glenview Capital Management,
LLC (Glenview) and Lawrence M. Robbins, as reported on a Schedule
13G/A filed on February 17, 2009. Glenview serves as investment
manager to various entities and Mr. Robbins is the Chief Executive
Officer of Glenview. As such, each of Glenview and Mr. Robbins may
be deemed to have shared voting power and shared dispositive power
with respect to all 606,681 of such shares, of which 115,103 shares
are issuable upon conversion of certain convertible debentures of
the Company.(2)
    
    Represents shares beneficially held by Ariel Investments, LLC
(Ariel), as reported on a Schedule 13G/A filed on June 10, 2008.
Ariel has sole voting power with respect to 198,323 of such shares
and sole dispositive power with respect to all 522,482 of such
shares. These shares are beneficially owned by investment advisory
clients of Ariel.(3)
    
    Represents shares beneficially held by Silver Point Capital, L.P.
(Silver Point), Mr. Edward A. Mulé and Mr. Robert J. OShea, as
reported on a Schedule 13G/A on February 17, 2009. Silver Point
serves as investment manager t various entities and Messrs. Mulé and
OShea are members of Silver Point Capital Management, LLC, the
general partner of Silver Point. As such, Silver Point may be
deemed to have sole voting and dispositive power over all 399,977
shares and Messrs. Mulé and OShea may be deemed to have shared
voting and dispositive power over all 399,977 shares.(4)
    
    Represents shares beneficially held by Thornburg Investment
Management, Inc. (Thornburg), as reported on a Schedule 13G/A
filed on April 19, 2007. Thornburg has sole voting power with
respect to 220,162 of such shares and sole dispositive power with
respect to all 360,068 of such shares. These shares are beneficially
owned by investment advisory clients of Thornburg.(5)
    
    Represents shares beneficially held by Tracer Capital Management
L.P. (Tracer), Riley McCormack and Matt Hastings, as reported on a
Schedule 13G/A filed on February 17, 2009. Tracer serves as an
investment manager to various entities. Mr. McCormack and Mr.
Hastings are the sole limited partners of Tracer. As such, each of
Tracer, Mr. McCormack and Mr. Hastings may be deemed to have shared
voting power and shared dispositive power with respect to all
316,986 of such shares. 74




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(6)
    
    Represents shares beneficially held by Whitebox Advisors, LLC
(Whitebox) and its various related entities, as reported on a
Schedule 13G filed on February 25, 2009. Whitebox serves as
investment manager to various entities and as such may be deemed to
have shared voting power and shared dispositive power with respect
to all of such shares, all of which are issuable upon the
conversion of certain convertible debentures of the Company.(7)
    
    Represents shares beneficially held by Franklin Resources, Inc.
(FRI), Charles B. Johnson, Rupert H. Johnson, Jr. and Franklin
Templeton Investments Corp. (Franklin Templeton), as reported on a
Schedule 13G/A filed on February 6, 2009. The shares are
beneficially owned by one or more open or closed end investment
companies or other managed accounts that are investment management
clients of investment managers that are direct and indirect
subsidiaries of FRI. Mr. Charles Johnson and Mr. Rupert Johnson are
the principal stockholders of FRI. As reported on the Schedule
13G/A, Franklin Templeton has sole voting and dispositive power with
respect to 248,707 of such shares. The address for Franklin
Templeton is 200 King Street W, Suite 1500, Toronto, ON, Canada M5H
3T4. 75




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##### Table of Contents



Security Ownership of Directors and Executive Officers
  Common StockPercentage ofName and Address (1)
    
    Number of Shares
    
    Shares OutstandingF. Edwin Harbach (2)
    
    
    16,042
    
    
    
    *David R. Hunter(3)
    
    
    13,203
    
    
    
    *Kenneth A. Hiltz
    
    
    
    
    
    
    *Douglas C. Allred(4)
    
    
    1,180
    
    
    
    *Betsy J. Bernard(5)
    
    
    940
    
    
    
    *Frederic F. Brace(6)
    
    
    
    
    
    
    *Jill S. Kanin-Lovers(7)
    
    
    460
    
    
    
    *Wolfgang H. Kemna(8)
    
    
    1,180
    
    
    
    *Albert L. Lord (9)
    
    
    1,332
    
    
    
    *Roderick C. McGeary(10)
    
    
    13,688
    
    
    
    *Eddie R. Munson (11)
    
    
    460
    
    
    
    *J. Terry Strange(12)
    
    
    1,300
    
    
    
    *All current executive officers and directors as a group (12 persons)
    
    
    49,785
    
    
    
    *
 
 *
    
    Less than 1% of our common stock outstanding.(1)
    
    The address for all persons listed is c/o BearingPoint, Inc., 100 Crescent Court, Suite 700, Dallas, Texas 75201.(2)
    
    Includes 6,163 shares of common stock that may be acquired through the exercise of stock options.(3)
    
    Includes 13,203 shares of common stock that may be acquired through the exercise of stock options.(4)
    
    Includes 300 shares of common stock that may be acquired through the exercise of stock options.(5)
    
    Includes 300 shares of common stock that may be acquired through the exercise of stock options.(6)
    
    Effective as of January 1, 2009, Frederic F. Brace was appointed to the Board a Class III Director. Mr. Brace
was granted 300 shares of common stock that may be acquired through the exercise of stock options, however, such
options will not vest until January 1, 2010.(7)
    
    Includes 300 shares of common stock that may be acquired through the exercise of stock options.(8)
    
    Includes 300 shares of common stock that may be acquired through the exercise of stock options.(9)
    
    Includes 300 shares of common stock that may be acquired through the exercise of stock options.(10)
    
    Includes 9,458 shares of common stock that may be acquired through the exercise of stock options.(11)
    
    Includes 300 shares of common stock that may be acquired through the exercise of stock options.(12)
    
    Includes 400 shares of common stock that may be acquired through the exercise of stock options. 76




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##### Table of Contents



ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 Related Party Transaction Policies
  Related Transactions
 Friedman Fleischer & Lowe, LLC /Spencer C. Fleischer
  AlixPartners
  77




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##### Table of Contents



Director Independence
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
 Pre-Approval Policies
  Independent Registered Public Accountants Fees
  Fiscal Year Ended December 31,Type of Fee
    
    2008
    
    
    2007Audit Fees(1)
    
    $
    24,875,000
    
    
    $
    31,595,000Audit-Related Fees(2)
    
    
    1,200,000
    
    
    
    805,000Tax Fees(3)
    
    
    1,700,000
    
    
    
    449,000All Other Fees(4)
    
    
    20,000
    
    
    
    2,187,000Total
    
    $
    27,795,000
    
    
    $
    35,036,000
 
 (1)
    
    Audit fees include audits of consolidated financial statements, reviews of unaudited quarterly financial statements
and services that are normally provided by independent auditors in connection with statutory and regulatory
filings.(2)
    
    Audit-related fees include assurance and related services provided by our independent auditors that are reasonably
related to the performance of the audit or review of our consolidated financial statements and are not included
above under Audit Fees. These services principally include audits of employee benefit plans, accounting
consultations, and other services in connection with regulatory reporting requirements.(3)
    
    Tax services principally include consultation in connection with tax compliance, tax consultations and tax planning.(4)
    
    All other fees include licenses to technical accounting research software and other consultations. 78




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##### Table of Contents



PART IV
 
 Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    Exhibit No.
    
    Description3.1
    
    Amended and Restated Certificate of Incorporation, dated as of February 7, 2001, which is incorporated
herein by reference to Exhibit 3.1 from the Companys Form 10-Q for the quarter ended March 31, 2001.3.2
    
    Certificate of Ownership and Merger merging Bones Holding into the Company, dated October 2, 2002, which is
incorporated herein by reference to Exhibit 3.3 from the Companys Form 10-Q for the quarter ended
September 30, 2002.3.3
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation, dated as of December 10,
2008, which is incorporated herein by reference to Exhibit 3.1 from the Companys Form 8-K filed with the
SEC on December 10, 2008.3.4
    
    Amended and Restated Bylaws, amended and restated as of December 5, 2008, which is incorporated herein by
reference to Exhibit 3.1 from the Companys Form 8-K filed with the SEC on December 5, 2008.4.1
    
    Rights Agreement, dated as of October 2, 2001, between the Company and EquiServe Trust Company, N.A., which
is incorporated herein by reference to Exhibit 1.1 from the Companys Registration Statement on Form 8-A
dated October 3, 2001.4.2
    
    Certificate of Designation of Series A Junior Participating Preferred Stock, which is incorporated herein
by reference to Exhibit A to Exhibit 1.1 from the Companys Registration Statement on Form 8-A dated
October 3, 2001.4.3
    
    Amendment No. 1 to the Rights Agreement between the Company and EquiServe Trust Company, N.A., which is
incorporated herein by reference to Exhibit 99.1 from the Companys Form 8-K filed on September 6, 2002.4.4
    
    Second Amendment to the Rights Agreement, dated as of October 27, 2007, between the Company and
Computershare Trust Company, N.A. (formerly EquiServe Trust Company, N.A.), which is incorporated herein by
reference to Exhibit 4.4 from the Companys Form 10-Q for the quarter ended June 30, 2007.10.1
    
    Amended and Restated Separation Agreement, dated as of February 13, 2001, among KPMG LLP, KPMG Consulting,
LLC and the Company, which is incorporated herein by reference to Exhibit 10.1 from the Companys Form 10-Q
for the quarter ended March 31, 2001.10.2
    
    Transition Services Agreement, dated as of February 13, 2001, among KPMG LLP, KPMG Consulting, LLC and the
Company, which is incorporated herein by reference to Exhibit 10.3 from the Companys Form 10-Q for the
quarter ended March 31, 2001.10.3
    
    Stock Purchase Agreement dated as of December 29, 1999, among Cisco Systems, Inc., KPMG LLP and the
Company, which is incorporated herein by reference to Exhibit 10.11 from the Companys Form S-1.
(Registration No. 333-36328) (referred to below as the Companys Form S-1).10.4
    
    Investor Rights Agreement dated as of January 31, 2000, among KPMG LLP, Cisco Systems, Inc. and the
Company, which is incorporated herein by reference to Exhibit 10.12 from the Companys Form S-1.10.5
    
    Irrevocable Waiver, dated May 17, 2004, by Cisco Systems, Inc. with respect to the Investor Rights
Agreement, dated January 31, 2000 and the Stock Purchase Agreement, dated December 29, 1999, which is
incorporated herein by reference to Exhibit 10.49 of the Companys Form S-1/A (Registration No.
333-100199).10.6
    
    Credit Agreement dated as of May 18, 2007, as amended and restated on June 1, 2007, among the Company,
BearingPoint, LLC, the guarantors party thereto, the lenders party thereto, UBS Securities LLC, Morgan
Stanley Senior
 79




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##### Table of Contents



Exhibit No.
    
    DescriptionFunding, Inc., UBS AG, Stamford Branch and Wells Fargo Foothill, LLC, which is incorporated
herein by reference to Exhibit 10.6 from the Companys Form 10-K for the year ended December 31, 2006.10.7
    
    Security Agreement dated as of May 18, 2007, among the Company, BearingPoint, LLC, the guarantors party
thereto and UBS AG, Stamford Branch, as Collateral Agent, which is incorporated herein by reference to
Exhibit 10.7 from the Companys Form 10-K for the year ended December 31, 2006.10.8
    
    Form of Term Note under the Credit Agreement dated as of May 18, 2007, which is incorporated herein by
reference to Exhibit 10.8 from the Companys Form 10-K for the year ended December 31, 2006.10.9
    
    Form of 2.50% Series A Convertible Subordinated Debentures due 2024, which is incorporated by reference to
Exhibit 10.66 from the Companys Form 10-K for the year ended December 31, 2004.10.10
    
    Form of 2.75% Series B Convertible Subordinated Debentures due 2024, which is incorporated by reference to
Exhibit 10.67 from the Companys Form 10-K for the year ended December 31, 2004.10.11
    
    Purchase Agreement, dated as of December 16, 2004, among the Company and the Initial Purchasers named
therein, which is incorporated by reference to Exhibit 10.68 from the Companys Form 10-K for the year
ended December 31, 2004.10.12
    
    Indenture, dated as of December 22, 2004, by and between the Company and The Bank of New York, as trustee,
which is incorporated by reference to Exhibit 99.1 from the Companys Form 8-K filed on March 10, 2006.10.13
    
    First Supplemental Indenture, dated as of November 7, 2006, between BearingPoint, Inc. and The Bank of New
York, as trustee under the Indenture, dated as of December 22, 2004, which is incorporated by reference to
Exhibit 99.1 from the Companys Form 8-K filed on November 8, 2006.10.14
    
    Resale Registration Rights Agreement, dated December 22, 2004, between the Company and the Initial
Purchasers, which is incorporated by reference to Exhibit 10.70 from the Companys Form 10-K for the year
ended December 31, 2004.10.15
    
    Form of 5.00% Convertible Senior Subordinated Debentures due 2025, which is incorporated by reference to
Exhibit 10.71 from the Companys Form 10-K for the year ended December 31, 2004.10.16
    
    Form of Securities Purchase Agreement, dated April 21, 2005, among the Company and the purchasers named
therein, which is incorporated by reference to Exhibit 10.72 from the Companys Form 10-K for the year
ended December 31, 2004.10.17
    
    Indenture, dated as of April 27, 2005, by and between the Company and the Bank of New York, as trustee,
which is incorporated by reference to Exhibit 99.2 from the Companys Form 8-K filed on March 10, 2006.10.18
    
    First Supplemental Indenture, dated as of November 2, 2006, between BearingPoint, Inc. and The Bank of New
York, as trustee under the Indenture, dated as of April 27, 2005, which is incorporated by reference to
Exhibit 99.2 from the Companys Form 8-K filed on November 3, 2006.10.19
    
    Registration Rights Agreement, dated April 27, 2005, between the Company and the placement agents named
therein, which is incorporated by reference to Exhibit 10.74 from the Companys Form 10-K for the year
ended December 31, 2004.10.20
    
    Securities Purchase Agreement, dated July 15, 2005, among the Company and certain affiliates of Friedman
Fleischer & Lowe, LLC, which is incorporated by reference to Exhibit 10.75 from the Companys Form 10-K for
the year ended December 31, 2004.10.21
    
    Form of 0.50% Convertible Senior Subordinated Debentures due July 2010, which is incorporated by reference
to Exhibit 10.76 from the Companys Form 10-K for the year ended December 31, 2004.10.22
    
    Form of Warrant Certificate, dated July 15, 2005, which is incorporated by reference to Exhibit 10.77 from
the Companys Form 10-K for the year ended December 31, 2004.10.23
    
    Registration Rights Agreement, dated July 15, 2005, between the Company and certain affiliates of Friedman
Fleischer & Lowe, LLC, which is incorporated by reference to Exhibit 10.78 from the Companys Form 10-K for
the year ended December 31, 2004.10.24*
    
    Amended and Restated 2000 Long-Term Incentive Plan, effective as of November 19, 2008.
 80




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##### Table of Contents



Exhibit No.
    
    Description10.25
    
    Employee Stock Purchase Plan, as amended and restated as of February 1, 2007, which is incorporated herein
by reference to Exhibit 10.25 from the Companys Form 10-K for the year ended December 31, 2006.10.26
    
    Amended and Restated 401(k) Plan dated August 21, 2003, which is incorporated herein by reference to
Exhibit 10.19 from the Companys Form 10-K for the year ended June 30, 2003.10.27
    
    Amendment No. 1 to Amended and Restated 401(k) Plan dated April 29, 2004, which is incorporated herein by
reference to Exhibit 10.20 from the Companys Form S-1/A (Registration No. 333-100199).10.28
    
    Amendment No. 2 to Amended and Restated 401(k) Plan dated June 24, 2005, which is incorporated by reference
to Exhibit 10.24 from the Companys Form 10-K for the year ended December 31, 2004.10.29
    
    Amendment No. 3 to Amended and Restated 401(k) Plan dated August 22, 2005, which is incorporated by
reference to Exhibit 10.25 from the Companys Form 10-K for the year ended December 31, 2004.10.30
    
    Amendment No. 4 to Amended and Restated 401(k) Plan dated November 1, 2005, which is incorporated by
reference to Exhibit 10.26 from the Companys Form 10-K for the year ended December 31, 2004.10.31
    
    Amendment No. 5 to Amended and Restated 401(k) Plan, effective as of September 14, 2006, which is
incorporated herein by reference to Exhibit 10.31 from the Companys Form 10-K for the year ended December
31, 2006.10.32
    
    Amendment No. 6 to Amended and Restated 401(k) Plan, effective as of January 1, 2006, which is incorporated
herein by reference to Exhibit 10.32 from the Companys Form 10-K for the year ended December 31, 2006.10.33
    
    Amendment No. 7 to Amended and Restated 401(k) Plan, effective as of May 1, 2007, which is incorporated
herein by reference to Exhibit 10.33 from the Companys Form 10-K for the year ended December 31, 2006.10.34*
    
    Amendment No. 8 to Amended and Restated 401(k) Plan, effective as of February 1, 2008.10.35*
    
    Amendment No. 9 to Amended and Restated 401(k) Plan, effective as of May 1, 2009.10.36*
    
    Amendment No. 10 to Amended and Restated 401(k) Plan, effective as of January 1, 2009.10.37
    
    Deferred Compensation Plan, as amended and restated as of August 1, 2003, which is incorporated herein by
reference to Exhibit 10.20 from the Companys Form 10-K for the year ended June 30, 2003.10.38
    
    Amendment to Deferred Compensation Plan effective as of December 31, 2004, which is incorporated by
reference to Exhibit 10.28 from the Companys Form 10-K for the year ended December 31, 2004.10.39
    
    Amended and Restated BearingPoint, Inc. Managing Directors Deferred Compensation Plan dated January 1,
2006, which is incorporated by reference to Exhibit 10.30 from the Companys Form 10-K for the year ended
December 31, 2004.10.40*
    
    First Amendment to Amended and Restated BearingPoint, Inc. Managing Directors Deferred Compensation Plan
dated January 1, 2006.10.41*
    
    Amended and Restated BearingPoint, Inc. Managing Directors Deferred Compensation Plan, effective December
31, 2008.10.42
    
    Form of Member Distribution Agreement for KPMG Consulting Qualified Employees, which is incorporated herein
by reference to Exhibit 10.6 from the Companys Form S-1 (including for Richard Roberts).10.43
    
    Form of Amendment to the Managing Director Agreement, dated as of January 31, 2005, between the Company and
certain executive officers (including for Richard Roberts), which is incorporated by reference to Exhibit
10.8 from the Companys Form 10-K for the year ended December 31, 2004.10.44
    
    Form of Managing Director Agreement (including for Roderick C. McGeary), which is incorporated herein by
reference to Exhibit 10.39 from the Companys Form 10-K for the year ended December 31, 2006.10.45
    
    Form of Managing Director Agreement, which is incorporated herein by reference to Exhibit 10.40 from the
Companys Form 10-K for the year ended December 31, 2006.10.46*
    
    Form of Managing Director Agreement.
 81




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##### Table of Contents



Exhibit No.
    
    Description10.47*
    
    Amendment to Managing Director Agreement, Member Distribution Agreement and Member Agreement.10.48
    
    Form of Special Termination Agreement (including for Richard Roberts), which is incorporated by reference
to Exhibit 10.93 from the Companys Form 10-K for the year ended December 31, 2005.10.49*
    
    Amendment to Special Termination Agreement.10.50*
    
    Form of Special Termination Agreement.10.51
    
    Form of Restricted Stock Agreement with certain officers of the Company pursuant to the 2000 Long-Term
Incentive Plan, which is incorporated herein by reference to Exhibit 10.5 from the Companys Form 10-Q for
the quarter ended September 30, 2002.10.52
    
    Form of Restricted Stock Agreement with non-employee directors of the Company pursuant to the Amended and
Restated Long-Term Incentive Plan, which is incorporated herein by reference to Exhibit 10.5 from the
Companys Form 10-Q for the quarter ended December 31, 2002.10.53
    
    Form of Restricted Stock Unit Agreement under the Companys 2000 Long-Term Incentive Plan for managing
directors and employees, which is incorporated by reference to Exhibit 10.81 from the Companys Form 10-K
for the year ended December 31, 2004.10.54*
    
    Amendment to Restricted Stock Unit Agreement under the Companys 2000 Long-Term Incentive Plan for managing
directors and employees.10.55
    
    Form of Performance Share Award Unit Agreement, which is incorporated by reference to Exhibit 99.1 from the
Companys Form 8-K filed with the SEC on February 8, 2007.10.56*
    
    Amendment to Performance Share Award Unit Agreement.10.57
    
    Form of Performance Cash Award Agreement, which is incorporated by reference to Exhibit 99.2 from the
Companys 
Form 8-K filed with the SEC on February 8, 2007.10.58*
    
    Amendment to Performance Cash Award Agreement.10.59
    
    Employment Letter, effective as of July 1, 2005, between the Company and Judy A. Ethell, which is
incorporated by reference to Exhibit 10.91 from the Companys Form 10-K for the year ended December 31,
2004.10.60
    
    Managing Director Agreement, dated as of July 1, 2005, between the Company and Judy A. Ethell, which is
incorporated herein by reference to Exhibit 10.54 from the Companys Form 10-K for the year ended December
31, 2006.10.61
    
    Special Termination Agreement, dated as of July 1, 2005, between the Company and Judy A. Ethell, which is
incorporated by reference to Exhibit 10.93 from the Companys Form 10-K for the year ended December 31,
2004.10.62
    
    Letter Agreement dated October 3, 2006, between the Company and Judy A. Ethell, which is incorporated by
reference to Exhibit 10.95 from the Companys Form 10-K for the year ended December 31, 2005.10.63
    
    Restricted Stock Unit Agreement, dated September 19, 2006, between the Company and Judy A. Ethell, which is
incorporated by reference to Exhibit 10.96 from the Companys Form 10-K for the year ended December 31,
2005.10.64
    
    Restricted Stock Unit Agreement, dated September 19, 2006, between the Company and Judy A. Ethell, which is
incorporated by reference to Exhibit 10.97 from the Companys Form 10-K for the year ended December 31,
2005.10.65
    
    Employment Letter, effective as of February 24, 2006, between the Company and Laurent C. Lutz, which is
incorporated by reference to Exhibit 10.91 from the Companys Form 10-K for the year ended December 31,
2005.10.66
    
    Managing Director Agreement, dated as of February 24, 2006, between the Company and Laurent C. Lutz, which
is incorporated by reference to Exhibit 10.92 from the Companys Form 10-K for the year ended December 31,
2005.10.67
    
    Special Termination Agreement, dated as of February 24, 2006, between the Company and Laurent C. Lutz,
which is incorporated by reference to Exhibit 10.94 from the Companys Form 10-K for the year ended
December 31, 2005.10.68*
    
    Independent Contractor Agreement, effective January 1, 2009, between the Company and Laurent C. Lutz.
 82




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##### Table of Contents



Exhibit No.
    
    Description10.69
    
    Employment Letter, effective as of December 31, 2007, between the Company and F. Edwin Harbach,
incorporated by reference to Exhibit 10.62 from the Companys Form 10-K for the year ended December 31,
2007.10.70*
    
    Amendment to Employment Letter, effective as of December 31, 2008, between the Company and F. Edwin Harbach.10.71
    
    Managing Director Agreement, effective as of December 31, 2007, between the Company and F. Edwin Harbach,
incorporated by reference to Exhibit 10.6 from the Companys Form 10-K for the year ended December 31,
2007.10.72
    
    Special Termination Agreement, dated as of December 31, 2007, between the Company and F. Edwin Harbach,
incorporated by reference to Exhibit 10.64 from the Companys Form 10-K for the year ended December 31,
2007.10.73
    
    Restricted Stock Unit Agreement, dated January 8, 2007, between the Company and F. Edwin Harbach, which is
incorporated by reference to Exhibit 99.5 from the Companys Form 8-K filed with the SEC on January 12,
2007.10.74
    
    Amendment No. 1 to the Restricted Stock Unit Agreement with F. Edwin Harbach dated January 8, 2007, dated
as of December 31, 2007, incorporated by reference to Exhibit 10.66 from the Companys Form 10-K for the
year ended December 31, 2007.10.75
    
    Restricted Stock Unit Agreement, dated January 7, 2008, between the Company and F. Edwin Harbach,
incorporated by reference to Exhibit 10.67 from the Companys Form 10-K for the year ended December 31,
2007.10.76
    
    Stock Option Agreement, dated January 7, 2008, between the Company and F. Edwin Harbach, incorporated by
reference to Exhibit 10.68 from the Companys Form 10-K for the year ended December 31, 2007.10.77
    
    Employment Letter, effective as of March 13, 2008, between the Company and David Hunter, incorporated by
reference to Exhibit 10.1 from the Companys Form 10-Q for the quarter ending March 31, 2008.10.78*
    
    Amendment to Employment Letter, effective as of December 31, 2008, between the Company and David Hunter.10.79
    
    Managing Director Agreement, effective as of March 13, 2008, between the Company and David Hunter,
incorporated by reference to Exhibit 10.2 from the Companys Form 10-Q for the quarter ending March 31,
2008.10.80
    
    Special Termination Agreement, effective as of March 13, 2008, between the Company and David Hunter,
incorporated by reference to Exhibit 10.3 from the Companys Form 10-Q for the quarter ending March 31,
2008.10.81
    
    Stock Option Agreement, dated March 17, 2008, between the Company and David Hunter, incorporated by
reference to Exhibit 10.4 from the Companys Form 10-Q for the quarter ending March 31, 2008.10.82
    
    Employment Letter dated April 24, 2008, effective as of May 13, 2008, between the Company and Eileen A.
Kamerick, incorporated by reference to Exhibit 10.5 from the Companys Form 10-Q for the quarter ending
March 31, 2008.10.83
    
    Supplemental Employment Letter dated May 12, 2008, between the Company and Eileen A. Kamerick, incorporated
by reference to Exhibit 10.6 from the Companys Form 10-Q for the quarter ending March 31, 2008.10.84
    
    Special Termination Agreement, effective as of May 13, 2008, between the Company and Eileen A. Kamerick,
incorporated by reference to Exhibit 10.7 from the Companys Form 10-Q for the quarter ending March 31,
2008.10.85
    
    Form of Restricted Stock Unit Agreement (including for Eileen A. Kamerick) , incorporated by reference to
Exhibit 10.8 from the Companys Form 10-Q for the quarter ending March 31, 2008.10.86
    
    Employment Letter dated July 1, 2008, effective as of June 4, 2008, between the Company and Eddie R.
Munson, incorporated by reference to Exhibit 10.5 from the Companys Form 10-Q for the quarter ending June
30, 2008.10.87
    
    Managing Director Agreement dated July 1, 2008, effective as of June 4, 2008, between the Company and Eddie
R. Munson, incorporated by reference to Exhibit 10.6 from the Companys Form 10-Q for the quarter ending
June 30, 2008.10.88
    
    Separation and Release of Claims Agreement dated as of May 12, 2008, between the Company and Judy A.
Ethell, incorporated by reference to Exhibit 10.7 from the Companys Form 10-Q for the quarter ending June
30, 2008.10.89
    
    Form of BearingPoint, Inc. Performance Cash Award Agreement, incorporated by reference to Exhibit 10.8 from
the Companys Form 10-Q for the quarter ending June 30, 2008.
 83




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Exhibit No.
    
    Description10.90
    
    Form of BearingPoint, Inc. Performance Share Unit Award Agreement, incorporated by reference to Exhibit
10.9 from the Companys Form 10-Q for the quarter ending June 30, 2008.10.91
    
    Agreement for Interim Management Services dated November 10, 2008, between the Company and AlixPartners,
LLP, incorporated by reference to Exhibit 10.3 from the Companys Form 10-Q for the quarter ending
September 30, 2008.10.92*
    
    Agreement for Interim Management and Restructuring Services, dated February 5, 2009, between the Company
and AP Services, LLC.10.93
    
    Joint Plan of Reorganization of BearingPoint, Inc. and its Subsidiaries under Chapter 11 of the Bankruptcy
Code, dated February 18, 2009, incorporated by reference to Exhibit 99.1 from the Companys Form 8-K filed
with the SEC on February 23, 2009.10.94
    
    Asset Purchase Agreement by and among Deloitte LLP, BearingPoint Inc. and certain subsidiaries of
BearingPoint, Inc. that are signatories thereto, dated as of March 23, 2009, incorporated by reference to
Exhibit 99.1 from the Companys Form 8-K filed with the SEC on April 10, 2009.10.95
    
    Amendment No. 1 to the Asset Purchase Agreement by and among Deloitte LLP, BearingPoint Inc. and certain
subsidiaries of BearingPoint, Inc. that are signatories thereto, dated as of April 3, 2009, incorporated by
reference to Exhibit 99.2 from the Companys Form 8-K filed with the SEC on April 10, 2009.10.96
    
    Amended and Restated Purchase Agreement among PricewaterhouseCoopers LLP, BearingPoint, Inc. and certain subsidiaries of
BearingPoint, Inc. that are signatories thereto, dated as of May 28, 2009, incorporated by reference to Exhibit
99.1 from the Companys Form 8-K filed with the SEC on June 1, 2009.10.97
    
    Share Sale Agreement relating to BearingPoint Co., Ltd (Chiyoda-ku) among BearingPoint International
Bermuda Holdings Limited and PwC Advisory Co., Ltd., dated April 2, 2009, incorporated by reference to
Exhibit 99.3 from the Companys Form 8-K filed with the SEC on April 23, 2009.14.1
    
    Standards of Business Conduct, which is incorporated by reference to Exhibit 14.1 from the Companys Form
10-K for the year ended December 31, 2006.16.1
    
    Letter dated June 28, 2007, from PricewaterhouseCoopers LLP to the Securities and Exchange Commission,
which is incorporated by reference to Exhibit 16.1 from the Companys Form 10-K for the year ended December
31, 2006.21.1*
    
    List of subsidiaries of the Registrant, as of December 31, 2008.23.1*
    
    Consent of Ernst & Young LLP.31.1*
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a).31.2*
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a).32.1*
    
    Certification of Chief Executive Officer pursuant to Section 1350.32.2*
    
    Certification of Chief Financial Officer pursuant to Section 1350.
 
 *
    
    filed herewith 84




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##### Table of Contents



SIGNATURES
  BEARINGPOINT, INC.By:
    /s/  F. Edwin HarbachName:
    F. Edwin HarbachTitle:
    Chief Executive Officer  Signature
    
    Title/s/ F. Edwin Harbach

F. Edwin Harbach
    
    Director, President and Chief Executive
Officer (principal executive officer)/s/ Kenneth A. Hiltz

Kenneth A. Hiltz
    
    Chief Financial Officer (principal
financial and accounting officer)/s/ Roderick C. McGeary

Roderick C. McGeary
    
    Chairman of the Board of Directors/s/ Frederic F. Brace

Frederic F. Brace
    
    Director/s/ Eddie R. Munson

Eddie R. Munson
    
    Director
 85




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##### 



ITEM 8:
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  BEARINGPOINT,
    INC.
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
  PageReport of Ernst & Young LLP,
    Independent Registered Public Accounting Firm


F-2Report of PricewaterhouseCoopers LLP, Independent
    Registered Public Accounting Firm


F-3Consolidated Balance Sheets at December 31,
    2008 and 2007


F-4Consolidated Statements of Operations for the
    years ended December 31, 2008, 2007 and 2006


F-5Consolidated Statements of Changes in
    Stockholders Deficit for the years ended December 31,
    2008, 2007 and 2006


F-6Consolidated Statements of Cash Flows for the
    years ended December 31, 2008, 2007 and 2006


F-8Notes to Consolidated Financial Statements


F-9   F-1




---



##### Table of Contents



REPORT OF
    ERNST & YOUNG LLP,
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                /s/
    Ernst & Young LLP
    
 F-2




---



##### Table of Contents



REPORT OF
    PRICEWATERHOUSE COOPERS LLP,
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM          
   F-3




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##### Table of Contents



BEARINGPOINT,
    INC.
  CONSOLIDATED
    BALANCE SHEETS
 (in
    thousands, except share and per share amounts)
  December 31,2008


2007ASSETSCurrent assets:Cash and cash equivalents

$
349,664


$
466,815Restricted cash (note 2)


3,468



1,703Accounts receivable, net of allowance for doubtful accounts of
    $2,287 at December 31, 2008 and $5,980 at December 31,
    2007


294,069



356,178Unbilled revenue


228,828



319,132Income tax receivable


11,854



8,869Deferred income taxes


13,555



11,521Prepaid expenses


43,060



36,500Other current assets


22,761



43,172Total current assets


967,259



1,243,890Property and equipment, net


102,187



103,671Goodwill


478,545



494,656Deferred income taxes, less current portion


17,008



25,179Other assets


89,916



114,008Total assets

$
1,654,915


$
1,981,404LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Current portion of notes payable

$
203,997


$
3,700Accounts payable


153,121



215,999Accrued payroll and employee benefits


295,253



368,208Deferred revenue


69,489



115,961Income tax payable


30,116



58,304Current portion of accrued lease and facilities charges


14,956



17,618Deferred income taxes


8,339



15,022Accrued legal settlements


6,591



8,716Other current liabilities


83,149



108,364Total current liabilities


865,011



911,892Notes payable, less current portion


772,919



970,943Accrued employee benefits


124,335



118,235Accrued lease and facilities charges, less current portion


25,226



48,066Deferred income taxes, less current portion


36,933



9,581Income tax reserve


238,548



242,308Other liabilities


138,174



149,668Total liabilities


2,201,146



2,450,693Commitments and contingencies (notes 9, 10, 11)Stockholders deficit:Preferred stock, $.01 par value 10,000,000 shares
    authorized






Common stock, $.01 par value 1,000,000,000 shares
    authorized, 4,514,555 shares issued and
    4,417,553 shares outstanding on December 31, 2008 and
    4,397,803 shares issued and 4,303,122 shares
    outstanding on December 31, 2007


2,244



2,186Additional paid-in capital


1,387,154



1,438,369Accumulated deficit


(2,212,650
)


(2,180,578
)Accumulated other comprehensive income


315,297



308,857Treasury stock, at cost (97,002 shares on December 31,
    2008 and 94,681 shares on December 31, 2007)


(38,276
)


(38,123
)Total stockholders deficit


(546,231
)


(469,289
)Total liabilities and stockholders deficit

$
1,654,915


$
1,981,404    F-4




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##### Table of Contents



BEARINGPOINT,
    INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 (in
    thousands, except share and per share amounts)
  Year Ended December 31,2008


2007


2006Revenue

$
3,197,041


$
3,455,562


$
3,444,003Costs of service:Professional compensation


1,564,250



1,858,480



1,725,479Other direct contract expenses


674,627



807,709



888,152Lease and facilities restructuring (benefit) charges


(3,524
)


20,869



29,621Other costs of service


282,377



299,979



250,225Total costs of service


2,517,730



2,987,037



2,893,477Gross profit


679,311



468,525



550,526Amortization of purchased intangible assets










1,545Selling, general and administrative expenses


550,818



701,317



748,250Operating income (loss)


128,493



(232,792
)


(199,269
)Interest income


7,374



12,084



8,749Interest expense


(61,023
)


(61,216
)


(37,182
)Insurance settlement










38,000Other (expense) income, net


(38,162
)


(8,566
)


8,659Income (loss) before taxes


36,682



(290,490
)


(181,043
)Income tax expense


68,754



72,233



32,397Net loss

$
(32,072
)

$
(362,723
)

$
(213,440
)Loss per share  basic and diluted:Net loss

$
(7.18
)

$
(83.90
)

$
(50.30
)*Weighted average shares  basic and diluted


4,468,179



4,323,343



4,243,093
*     *
    
    Unaudited for reverse stock split, see Note 1,
    Reverse Stock Split.   F-5




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##### Table of Contents



BEARINGPOINT,
    INC.
  CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT
 (in
    thousands)
  Notes


AccumulatedCommon Stock


Additional





receivable


otherShares





paid-in


Accumulated


from


comprehensive


Treasury Stock


Comprehensiveissued


Amount


capital


deficit


stockholders


income (loss)


Shares


Amount


Income (loss)


TotalBalance at December 31, 2005


4,107
*

$
2,044


$
1,261,797


$
(1,484,199
)

$
(7,578
)

$
218,091



(76
)*

$
(35,727
)





$
(45,572
)Notes receivable from stockholders, including $3 in interest and
    forgiveness of loan


















112



















112Restricted stock awards to Board of Directors


1
*






460



























460Compensation recognized for stock options and restricted stock
    units










52,933



























52,933SFAS 158 adjustment, net of tax benefit of $3,756






















(11,417
)














(11,417
)Comprehensive income (loss):Net loss














(213,440
)

















$
(213,440
)


(213,440
)Minimum pension liability, net of tax of $2,961






















8,880











8,880



8,880Foreign currency translation adjustment






















30,743











30,743



30,743Total comprehensive loss

































$
(173,817
)Balance at December 31, 2006


4,108
*

$
2,044


$
1,315,190


$
(1,697,639
)

$
(7,466
)

$
246,297



(76
)*

$
(35,727
)





$
(177,301
)Compensation recognized for stock options, restricted stock
    units, performance share units, Employee Stock Purchase Plan, BE
    an Owner and restricted stock awards










97,062



























97,062Sale of common stock under Employee Stock Purchase
    Plan  BE an Owner


51



26



10,122



























10,148Sale of common stock under Employee Stock Purchase Plan


62



31



12,343



























12,374Restricted stock awards to Board of Directors


1



































Settlement of notes receivable from stockholders






(3
)


(6,649
)






7,466







(6
)


(782
)






32Settlement of Softline acquisition obligation


11



6



10,383



























10,389Settlement of restricted stock units


165



82



(82
)














(13
)


(1,614
)






(1,614
)FSP 00-19-2
    adoption














(371
)






















(371
)FIN 48 adoption














(119,845
)






















(119,845
)Comprehensive income (loss):Net loss














(362,723
)

















$
(362,723
)


(362,723
)Prior service cost, net of tax benefit of $1,270






















1,800











1,800



1,800Net actuarial gain, net of tax of $6,229






















13,056











13,056



13,056Foreign currency translation adjustment






















47,704











47,704



47,704Total comprehensive loss

































$
(300,163
)Balance at December 31, 2007


4,398


$
2,186


$
1,438,369


$
(2,180,578
)

$



$
308,857



(95
)

$
(38,123
)





$
(469,289
)    F-6




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##### Table of Contents



BEARINGPOINT,
    INC.
  CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT 
    (Continued)
 (in
    thousands)
  Notes


AccumulatedCommon Stock


Additional





receivable


otherShares





paid-in


Accumulated


from


comprehensive


Treasury Stock


Comprehensiveissued


Amount


capital


deficit


stockholders


income (loss)


Shares


Amount


Income (loss)


TotalBalance at December 31, 2007


4,398


$
2,186


$
1,438,369


$
(2,180,578
)

$



$
308,857



(95
)

$
(38,123
)





$
(469,289
)Compensation recognized for stock options, restricted stock
    units, performance share units, Employee Stock Purchase Plan, BE
    an Owner and restricted stock awards, net of adjustments










(52,778
)


























(52,778
)Sale of common stock under Employee Stock Purchase Plan


46



23



1,672



























1,695Restricted stock awards to Board of Directors


1







124



























124Settlement of restricted stock units


70



35



(233
)














(2
)


(153
)






(351
)Comprehensive income (loss):Net loss














(32,072
)

















$
(32,072
)


(32,072
)Prior service cost, net of tax of $110






















1,126











1,126



1,126Net actuarial loss, net of tax benefit of $(1,442)






















(3,983
)










(3,983
)


(3,983
)Foreign currency translation adjustment






















9,297











9,297



9,297Total comprehensive income

































$
(25,632
)Balance at December 31, 2008


4,515


$
2,244


$
1,387,154


$
(2,212,650
)

$



$
315,297



(97
)

$
(38,276
)





$
(546,231
)     *
    
    Unaudited for reverse stock split, see Note 1,
    Reverse Stock Split.   F-7




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##### Table of Contents





BEARINGPOINT,
    INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (in
    thousands)
  Year Ended December 31,2008


2007


2006Cash flows from operating activities:Net loss

$
(32,072
)

$
(362,723
)

$
(213,440
)Adjustments to reconcile net loss to net cash (used in) provided
    by operating activities:Deferred income taxes


21,976



4,060



(13,406
)(Benefit) provision for doubtful accounts


(1,343
)


2,465



(464
)Stock-based compensation, net of adjustments


(52,654
)


97,062



53,393Depreciation and amortization of property and equipment


45,915



63,472



74,023Amortization of purchased intangible assets










1,545Lease and facilities restructuring (benefit) charges


(3,524
)


20,869



29,621Loss on disposal and impairment of assets


4,929



9,575



3,769Amortization of debt issuance costs and debt accretion


12,410



13,955



8,936Reversal of global tax equalizations


(36,959
)






Unrealized foreign exchange losses (gains)


16,935



11,326



(8,549
)Changes in assets and liabilities:Accounts receivable


57,808



17,353



84,124Unbilled revenue


85,560



28,510



19,814Income tax receivable, prepaid expenses and other current assets


9,084



20,188



(22,557
)Other assets


17,205



(13,917
)


(4,565
)Accounts payable


(62,182
)


(58,711
)


(26,322
)Income tax payable, accrued legal settlements and other current
    liabilities


(63,814
)


(51,421
)


(12,715
)Accrued payroll and employee benefits


(25,240
)


(5,501
)


48,099Deferred revenue


(57,025
)


(18,941
)


(38,605
)Income tax reserve and other liabilities


(867
)


29,084



78,269Net cash (used in) provided by operating activities


(63,858
)


(193,295
)


60,970Cash flows from investing activities:Purchases of property and equipment


(48,221
)


(38,227
)


(52,871
)(Increase) decrease in restricted cash


(1,765
)


1,393



118,151Net cash (used in) provided by investing activities


(49,986
)


(36,834
)


65,280Cash flows from financing activities:Proceeds from issuance of common stock


1,695



12,374



Treasury stock through net share delivery


(118
)


(1,614
)


Net proceeds from issuance of notes payable


2,141



284,015



Repayments of notes payable


(5,391
)


(4,209
)


(6,506
)Increase (decrease) in book overdrafts


1,106







(810
)Net cash (used in) provided by financing activities


(567
)


290,566



(7,316
)Effect of exchange rate changes on cash and cash equivalents


(2,740
)


16,807



15,297Net (decrease) increase in cash and cash equivalents


(117,151
)


77,244



134,231Cash and cash equivalents  beginning of period


466,815



389,571



255,340Cash and cash equivalents  end of period

$
349,664


$
466,815


$
389,571Supplementary cash flow information:Interest paid

$
50,150


$
43,733


$
27,582Taxes paid, net of refunds

$
69,108


$
18,427


$
21,333Supplemental non-cash investing and financing activities:Settlement of notes receivable from stockholders

$



$
7,466


$
Settlement of Softline acquisition obligation

$



$
10,389


$
Sale of common stock  BE an Owner

$



$
10,148


$
    F-8




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##### Table of Contents



BEARINGPOINT,
    INC.



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)



The information set forth in Notes 1 through 21 below is as of
    March 31, 2009. These Notes should be read in conjunction
    with Note 22, Subsequent Events, which provides
    information regarding BearingPoint, Inc. since March 31,
    2009 and supplements the information provided in Notes 1 through
    21.



1. Description
    of the Business, Chapter 11 Reorganization Proceedings and
    Basis of Presentation



The
    Company





BearingPoint, Inc. (the Company) is one of the
    worlds leading providers of management and technology
    consulting services to Forbes Global 2000 companies as well
    as government organizations. The Companys core services,
    which include management consulting, technology solutions, as
    well as application services and managed services, are designed
    to help its clients generate revenue, increase
    cost-effectiveness, manage regulatory compliance, integrate
    information and transition to next-generation
    technology. The Company had approximately 15,200 employees
    at December 31, 2008.





In North America, the Company delivers consulting services
    through its Public Services, Commercial Services and Financial
    Services industry groups, which provide significant
    industry-specific knowledge and service offerings. Outside of
    North America, the Company is organized on a geographic
    basis  Europe, the Middle East and Africa
    (EMEA), the Asia Pacific region and Latin America.
    As of January 1, 2009, the Company combined three of its
    business segments, Commercial Services, Financial Services and
    Latin America, into Commercial Services and will manage the
    operations of these three segments as one combined segment
    reporting to a single segment leader, and realign resources and
    internal management to gain synergies in both costs and revenue.



Reverse
    Stock Split





At the annual meeting of stockholders held on December 5,
    2008, the Companys stockholders approved the
    implementation of a one-for-fifty reverse stock split of the
    Companys common stock. The record and effective date for
    the reverse stock split was December 10, 2008. Immediately
    prior to the effective time of the reverse stock split, the
    Company had 220,851,816 shares of common stock outstanding.
    Upon the effectiveness of the reverse stock split, the Company
    had 4,417,036 shares of common stock outstanding. The
    reverse stock split had no effect on the number of authorized
    shares of common stock. All share amounts presented in the
    Consolidated Financial Statements and in the notes thereto have
    been adjusted to reflect the reverse stock split. The effect of
    the reverse stock split on 2006 and 2005 disclosures is
    unaudited.



Chapter 11
    Bankruptcy Proceedings and Proposed Plan of Reorganization;
    Proposed Sale of Portions of the Company





On February 18, 2009 (the Petition Date),
    BearingPoint, Inc. and certain of its subsidiaries based in the
    U.S. (collectively, the Debtors) filed
    voluntary petitions for relief under chapter 11 of
    title 11 of the United States Code (the
    Bankruptcy Code) in the United States Bankruptcy
    Court for the Southern District of New York (the
    Bankruptcy Court). The chapter 11 cases are
    being jointly administered, for procedural purposes only, under
    the caption In re BearingPoint, Inc., et al., Case
    No. 09-10691
    (REG) (the Chapter 11 Cases). The Debtors will
    continue to manage their properties and operate their business
    as
    debtors-in-possession
    under the jurisdiction of the Bankruptcy Court and in accordance
    with the applicable provisions of the Bankruptcy Code and the
    orders of the Bankruptcy Court. In addition, as part of the
    relief granted to the Debtors on the Petition Date, the
    Bankruptcy Court entered an order confirming that the
    Companys subsidiaries that are domiciled outside of the
    United States are not part of the Chapter 11 Cases. The
    Debtors expect to continue to operate in the normal course of
    business during the reorganization process and to continue to
    serve their clients. The Debtors may pay all debts and honor all
    obligations arising in the ordinary course of their businesses
    after the Petition Date. However,

F-9




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##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
          
    New Senior Secured Credit Facility.  The 2007
    Credit Facility will be replaced with a new senior secured
    credit facility as follows: term loan in the amount of
    $272 million plus accrued interest and a synthetic letter
    of credit facility in the amount of up to $130 million;
    plus the issuance of new convertible preferred stock with a
    liquidation preference of $50 million, plus accrued and
    unpaid dividends, which is convertible into class 3 common
    stock (as described below).
    Unsecured Debt.  All unsecured debt will be
    exchanged for three different classes of common stock. Holders
    of the 5.00% Convertible Senior Debentures and holders of
    the $40 million 0.50% Convertible Senior Subordinated
    Debentures due 2010 (the 0.50% Convertible Senior
    Debentures) will receive shares of class 1 common
    stock. Holders of the $250 million 2.50% Series A
    Convertible Subordinated Debentures due 2024 (the
    Series A Convertible Subordinated Debentures)
    and holders of the $200 million 2.75% Series B
    Convertible Subordinated Debentures due 2024 (the
    Series B Convertible Subordinated Debentures)
    will receive shares of class 2 common stock. Certain
    general unsecured creditors will receive shares of class 3
    common stock. The three classes of common stock will be entitled
    to the same dividends, distributions and voting rights, except
    that until the holders of class 1 common stock have
    received dividends and distributions of $240 million, such
    holders will be entitled to the dividend, distribution and
    voting rights (except with respect to the election of directors)
    of the holders of class 2 common stock.
    Existing Equity.  All existing equity in the
    Company will be cancelled for no consideration. F-10




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##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
                F-11




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
    90-7, (SOP 90-7) SOP 90-7 SOP 90-7
  Going
    Concern
      2. Summary
    of Significant Accounting Policies
  Principles
    of Consolidation
    Use of
    Estimates
    Reclassifications
   F-12




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
  Revenue
    Recognition
    81-1, (SOP 81-1). and/or SOP 97-2, SOP 98-9 SOP 81-1, SOP 81-1
     F-13




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
  00-21, SOP 81-1; and/or
        Costs of
    Service
   F-14




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
    Selling,
    General and Administrative Expenses
    Cash,
    Cash Equivalents and Restricted Cash
    Concentrations
    of Credit Risk and Fair Value of Financial Instruments
   F-15




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
     Allowance
    for Doubtful Accounts
    and/or
  Property
    and Equipment
  SOP 98-1,
  Accounting
    for Leases
   F-16




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
  Asset
    Retirement Obligations
    Goodwill
    and Other Intangible Assets
        Valuation
    of Long-Lived Assets
   F-17




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
    Foreign
    Currency
      Accounting
    for Income Taxes
      Pension
    and Postretirement Benefits
   F-18




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
    Accounting
    for Employee Global Mobility and Tax Equalization
    Stock-Based
    Compensation
      Derivative
    Financial Instruments
  EITF 00-19, EITF 98-5, (EITF 98-5), EITF 00-27, No. 98-5 (EITF 00-27),
 F-19




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##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
     Accumulated
    Other Comprehensive Income
    Foreign currency


Pension andtranslation


post-retirementadjustment


benefit


TotalBalance December 31, 2006

$
262,155


$
(15,858
)

$
246,297Prior service cost, net of tax benefit of $1,270






1,800



1,800Net actuarial gain, net of tax of $6,229






13,056



13,056Change in foreign currency translation


47,704







47,704Balance December 31, 2007


309,859



(1,002
)


308,857Prior service cost, net of tax of $110






1,126



1,126Net actuarial loss, net of tax benefit of $1,442






(3,983
)


(3,983
)Change in foreign currency translation


9,297







9,297Balance December 31, 2008

$
319,156


$
(3,859
)

$
315,297   Recently
    Issued Accounting Pronouncements
     F-20




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
     No. 14-1, 14-1). 14-1 14-1 14-1;
  SFAS No. 157-3, (FSP 157-3). FSP 157-3 FSP 157-3 FSP 157-3
    3. Loss
    per Share
     F-21




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
     Year Ended December 31,2008


2007


2006Net loss

$
(32,072
)

$
(362,723
)

$
(213,440
)Weighted average common shares outstanding


4,371,495



4,056,394



4,024,869Weighted average vested RSUs


96,684



266,949



218,224Weighted average shares outstanding


4,468,179



4,323,343



4,243,093Earnings per share  basic and diluted

$
(7.18
)

$
(83.90
)

$
(50.30
)     Year Ended December 31,2008


2007


2006Employee stock options


566,334



673,657



797,398Employee stock purchase plan


798,716







96,635Restricted stock units


111,578



165,065



86,665Performance share units(1)


783,902



900,787



Series A Convertible Subordinated Debentures


476,204



476,204



476,204Series B Convertible Subordinated Debentures


380,963



380,963



380,9635.00% Convertible Senior Debentures


606,060



606,060



606,0600.50% Convertible Senior Debentures


118,519



118,519



118,519Warrants issued in connection with the 0.50% Convertible
    Senior Debentures


70,000



70,000



70,000Softline acquisition obligation (see Note 9)










14,7153,912,276



3,391,255



2,647,159     (1)
    
    As of the end of the reporting
    period, the performance conditions described further in
    Note 13, Stock-Based Compensation, have not
    been met; however, the shares reflected in the table represent
    the maximum settlement of shares under this program. F-22




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
   4. Property
    and Equipment
    December 31,2008


2007Property and equipment:Internal-use software

$
100,899


$
126,728Equipment


70,524



83,491Leasehold improvements


62,206



65,089Furniture


28,077



30,111Total property and equipment


261,706



305,419Accumulated depreciation and amortization:Internal-use software


(47,475
)


(84,671
)Equipment


(55,063
)


(61,695
)Leasehold improvements


(40,561
)


(39,099
)Furniture


(16,420
)


(16,283
)Total accumulated depreciation and amortization


(159,519
)


(201,748
)Property and equipment, net

$
102,187


$
103,671     Year Ended December 31,2008


2007


2006Amounts included in:Other costs of service

$
27,892


$
40,502


$
40,502Selling, general and administrative expenses


18,023



22,970



33,521$
45,915


$
63,472


$
74,023     5. Business
    Acquisitions, Goodwill and Other Intangible Assets
   F-23




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
     ForeignBalance





Currency


BalanceDecember 31,





Translation


December 31,2007


Reductions


Adjustment


2008Public Services

$
23,581


$



$
171


$
23,752Financial Services


9,210







25



9,235EMEA


385,650







(15,559
)


370,091Asia Pacific


75,003







(607
)


74,396Latin America


1,010







(141
)


869Corporate/Other


202











202Total

$
494,656


$



$
(16,111
)

$
478,545   ForeignBalance





Currency


BalanceDecember 31,





Translation


December 31,2006


Reductions


Adjustment


2007Public Services

$
23,581


$



$



$
23,581Financial Services


9,210











9,210EMEA


359,133



(7,495
)(1)


34,012



385,650Asia Pacific


70,402







4,601



75,003Latin America


918







92



1,010Corporate/Other


202











202Total

$
463,446


$
(7,495
)

$
38,705


$
494,656     (1)
    
    Amount represents the reversal of
    uncertain income tax liabilities recorded as part of the
    acquisition of a consulting practice in EMEA against goodwill,
    as the statute of limitations for the potential tax liability
    expired during the first quarter of 2007.     F-24




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
    6. Notes
    Payable
    December 31,2008


2007Current portion(1):Term Loans under the 2007 Credit Facility

$
3,000


$
3,000$200,000 5.00% Convertible Senior Subordinated Debentures
    due 2025


200,000



Other


997



700Total current portion


203,997



3,700Long-term portion:$250,000 2.50% Series A Convertible Subordinated Debentures
    due 2024 and $200,000 2.75% Series B Convertible
    Subordinated Debentures due 2024


450,000



450,000$200,000 5.00% Convertible Senior Subordinated Debentures
    due 2025






200,000$40,000 0.50% Convertible Senior Subordinated Debentures
    due 2025 (net of discount of $9,479 and $14,389, respectively)


30,521



25,611Term Loans under the 2007 Credit Facility


291,750



294,750Other


648



582Total long-term portion


772,919



970,943Total notes payable

$
976,916


$
974,643     Year

Amount(2)2009

$
3,9972010


34,1692011


3,0002012


285,7502013


Thereafter(3)


650,000Total

$
976,916     (1)
    
    The weighted average interest rate
    on the current portion of notes payable as of December 31,
    2008 and 2007 was 5.7% and 8.8%, respectively.(2)
    
    As described below, the holders of
    the Subordinated Debentures (as defined below) have the right to
    convert the debentures into shares of Company common stock only
    upon occurrence of certain triggering events. The
    5.00% Convertible Senior Debentures (as defined below) were
    convertible upon issuance on April 27, 2005, and the F-25




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
  0.50% Convertible Senior
    Debentures (as defined below) were convertible starting on
    July 15, 2006. Upon conversion of these debentures, the
    Company will have the right to deliver, in lieu of shares of
    common stock, cash or a combination of cash and shares of common
    stock. In addition, the holders of the 5.00% Convertible
    Senior Debentures and Subordinated Debentures have the right, at
    their option, to require the Company to repurchase all or some
    of their debentures on various dates prior to maturity (see
    below).(3)
    
    The $200,000 principal outstanding
    related to the 5.00% Convertible Senior Subordinated
    Debentures is presented according to its 2025 maturity.  No. EITF 00-19-2, (FSP 00-19-2). FSP 00-19-2 FSP 00-19-2,
  2007
    Credit Facility
   F-26




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
         
    The affirmative covenantsinclude, among other
    things:  the delivery of unaudited quarterly and
    audited annual financial statements, all in accordance with
    generally accepted accounting principles, certain monthly
    operating metrics and budgets; compliance with applicable laws
    and regulations (excluding, prior to October 31, 2008,
    compliance with certain filing requirements under the securities
    laws); maintenance of existence and insurance; after
    October 31, 2008, as requested by the Administrative Agent,
    reasonable efforts to maintain credit ratings; and maintenance
    of books and records (subject to the material weaknesses
    previously disclosed in the Companys Annual Report on Form
    10-K for the
    year ended December 31, 2005).
    The negative covenants, which (subject to exceptions)
    restrict certain of the Companys corporate activities,
    include, among other things, limitations on: disposition of
    assets; mergers and acquisitions; payment of dividends; stock
    repurchases and redemptions; incurrence of additional
    indebtedness; making of loans and investments; creation of
    liens; prepayment of other indebtedness; and engaging in certain
    transactions with affiliates.      Series A
    and Series B Convertible Subordinated Debentures
   F-27




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
      EITF 96-19, (EITF 96-19),
     F-28




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
          5.00% Convertible
    Senior Debentures
   F-29




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
  EITF 96-19,
         F-30




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
       July 2005
    Convertible Senior Subordinated Debentures
  EITF 96-19,
  Form 10-Q
     F-31




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
            EITF 98-5 EITF 00-27,
   F-32




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
    Discontinued
    Credit Facilities
  2005
    Credit Facility
      Chapter 11
    Impact
     F-33




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
        7. Accrued
    Payroll and Employee Benefits
    December 31,2008


2007Accrued compensated absences

$
87,014


$
100,210Payroll related taxes


29,778



45,671Employee mobility and tax equalization


72,750



108,056Accrued bonus(1)


25,220



37,393Deferred compensation and retirement benefits


43,382



28,402Other


37,109



48,476Total

$
295,253


$
368,208     (1)
    
    During the fourth quarter of 2008,
    the Company reversed $10,565 related to the 2007 portion of a
    performance cash award (PCA) program for which the
    Company determined the achievement of the performance condition
    not to be probable.   F-34




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
  8. Other
    Current Liabilities
    December 31,2008


2007Accrual for loss contracts

$
12,821


$
23,006Sales, use and value added taxes payable


31,050



37,694Other


39,278



47,664Total

$
83,149


$
108,364   9. Softline
    Acquisition Obligation
      10. Collaboration
    Agreement
   F-35




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
    11. Commitments
    and Contingencies
    
    Claims and investigations arising from its inability to timely
    file periodic reports under the Exchange Act (the Exchange
    Act) and the restatement of its financial statements for
    certain prior periods to correct accounting errors and
    departures from generally accepted accounting principles for
    those years (SEC Reporting Matters);
    Claims and investigations being conducted by agencies or
    officers of the U.S. Federal government and arising in
    connection with its provision of services under contracts with
    agencies of the U.S. Federal government (Government
    Contracting Matters); and
    Claims made in the ordinary course of business by clients
    seeking damages for alleged breaches of contract or failure of
    performance, by current or former employees seeking damages for
    alleged acts of wrongful termination or discrimination, and by
    creditors or other vendors alleging defaults in payment or
    performance (Other Matters).      SEC
    Reporting Matters
  2005
    Class Action Suits
  Rule 10b-5
 F-36




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
  Makor Issues & Rights, Ltd v. Tellabs, Tellabs Tellabs
  SEC
    Investigation
  Form 8-K.
   F-37




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
  Government
    Contracting Matters
  Government
    Contracts
    Other
    Matters
  The
    County of San Diego, CA
     F-38




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
  Department
    of the Interior
                Previously
    Resolved Matters
  Hawaiian
    Telcom Communications, Inc.
   F-39




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
    Telecommunications
    Company
    Operating
    Leases
      Year ending December 31:2009

$
75,4532010


54,2582011


37,9962012


27,3332013


18,180Thereafter


21,543Total minimum payments required

$
234,763    F-40




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
  Other
    Commitments
      and/or
  12. Stockholders
    Equity
  Notes
    Receivable from Stockholders
   F-41




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
    Treasury
    Stock
    Preferred
    Stock
    Shareholder
    Rights Plan
         F-42




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
        13. Stock-Based
    Compensation
  Long-Term
    Incentive Plan
        10-year
   F-43




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
      Year Ended December 31,2008(1)


2007(2)


2006Stock options

$
1,144


$
7,473


$
21,097RSUs


11,884



18,920



26,280PSUs


(66,590
)


66,590



ESPP and BE an Owner


784



3,736



5,556Restricted stock awards


124



343



460Total

$
(52,654
)

$
97,062


$
53,393     (1)
    
    During the fourth quarter of 2008,
    an adjustment of $93,472 was recorded to reverse $66,590 of
    expenses originally recorded in 2007 and $26,882 of expenses
    recorded through the third quarter of 2008, associated with the
    PSU plan due to the Companys estimate of the
    performance-based metrics not being probable of achievement at
    the end of the plan period. Additionally, the Company recorded
    an adjustment to the forfeiture rate on RSUs totaling $2,906.(2)
    
    During the year ended December 31,
    2007, an adjustment of $7,586 was recorded to true up the
    stock-based compensation expense calculated with an estimated
    forfeiture rate and capture the impact of unanticipated
    forfeitures that occurred in the fourth quarter of 2007.       F-44




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
      Stock Price


Risk-Free





ExpectedExpected


Interest


Expected


DividendVolatility


Rate


Life


YieldYear ended December 31, 2008


46.50
%


3.05
%


5.7



Year ended December 31, 2007


41.85
%


4.41
%


5.5



Year ended December 31, 2006


50.80
%


4.69
%


6



     Blackout
    Period
    Form S-8 Form S-8
 F-45




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
  Stock
    Option Plans
    WeightedWeighted


AverageAverage


Remaining


AggregateNumber


Exercise


Contractual


Intrinsicof Options


Price


Life (Years)


ValueOutstanding at December 31, 2007


613,393


$
555.73Granted


60,132


$
102.34Forfeited


(161,048
)

$
543.15Outstanding at December 31, 2008


512,477


$
506.49Vested or expected to vest at December 31, 2008


504,174


$
512.96



4.4


$
Exercisable at December 31, 2008


457,125


$
554.12



3.9


$
       Restricted
    Stock Units
    WeightedAverageNumber


Grant Dateof RSUs


Fair ValueNonvested at December 31, 2007(1)


128,575


$
406.81Granted


41,290


$
113.59Vested


(45,381
)

$
411.08Forfeited


(33,128
)

$
302.04Nonvested at December 31, 2008(1)


91,356


$
310.16Vested at December 31, 2008(1)


87,879Outstanding at December 31, 2008(1)


179,235     (1)
    
    Approximately 838 RSUs (net of
    forfeitures) and 626 RSUs (net of forfeitures) have been
    excluded from the December 31, 2007 and 2008 nonvested balances,
    respectively, because they were awarded to recipients in
    countries F-46




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
  where local laws require a cash
    settlement. Similarly, approximately 551 RSUs (net of
    forfeitures) and 1,177 RSUs (net of forfeitures) have been
    excluded from the December 31, 2008 vested and outstanding
    balances, respectively. Cash in the amount of $38 was used to
    settle these RSUs in 2008.        Performance
    Share Units    WeightedAverageNumber


Grant Dateof PSUs


Fair ValueNonvested and outstanding at December 31, 2007(1)


362,097


$
626.55Granted


Forfeited


(104,488
)

$
614.84Nonvested and outstanding at December 31, 2008(1)


257,609


$
631.29     (1)
    
    Approximately 1,087 PSUs have been
    excluded from the December 31, 2008 and 2007 nonvested
    balances, respectively, because they were awarded to recipients
    in countries where local laws require a cash settlement.   F-47




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
            
    a performance period of February 2, 2007 to
    December 31, 2009;
    a grant date closing stock price equal to the closing price of a
    share of the Companys common stock as reported on the New
    York Stock Exchange;
    a risk-free rate range of 4.44% to 5.20% based upon a term
    structure over the performance period; and
    a volatility range of 2.05% to 50.58% based upon using a term
    structure over the performance period incorporating an average
    blended rate of the Companys historical volatility and
    implied volatility from the Companys peer group within the
    S&P 500.    Restricted
    Stock Awards   F-48




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
    Employee
    Stock Purchase Plan  24-month 24-month 6-months 6-month
    Chapter 11
    Impact   F-49




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
      14.
    Income
    Taxes      Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2008


2007


2006Current:Federal

$
(15,645
)

$
10,972


$
4,855State and local


1,500



1,100



1,199Foreign


59,142



49,304



27,648Total current


44,997



61,376



33,702Deferred:Foreign


23,756



10,857



(1,305
)Total deferred


23,756



10,857



(1,305
)Total

$
68,753


$
72,233


$
32,397  F-50




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
     Year Ended December 31,2008


2007


2006U.S. federal statutory income tax rate


35.0
%


35.0
%


35.0
%Change in reserves


(5.3
)%


(4.0
)%


(4.6
)%Change in valuation allowance


(32.2
)%


(42.4
)%


(40.2
)%Foreign taxes


30.0
%


(6.0
)%


2.1
%Nondeductible meals and entertainment expense


18.1
%


(2.3
)%


(4.3
)%State taxes, net of federal benefit


4.6
%


4.3
%


3.7
%Unremitted foreign earnings


60.4
%


0.0
%


0.0
%Foreign recapitalization and restructuring


67.3
%


(5.9
)%


(3.0
)%Nondeductible interest


20.4
%


(0.9
)%


(2.1
)%Prior year tax refund claims


(15.4
)%


0.0
%


0.0
%Foreign dividends


6.6
%


(0.1
)%


(2.6
)%Other, net


(2.1
)%


(2.6
)%


(1.9
)%Effective income tax rate


187.4
%


(24.9
)%


(17.9
)%     December 31,


December 31,2008


2007Deferred income tax assets:Net operating loss carryforwards

$
307,316


$
287,646Accrued compensation


31,723



39,624Equity-based compensation


29,809



58,805Accrued liabilities


27,877



32,299Other assets


61,000



76,816Total gross deferred income taxes


457,725



495,190Less valuation allowance


(443,652
)


(468,563
)Total net deferred income tax assets


14,073



26,627Deferred income tax liabilities:Unremitted foreign earnings


26,463



Property and equipment


259



5,937Revenue






5,334Foreign currency translation


2,060



3,259Total deferred income tax liabilities


28,782



14,530Net deferred income tax (liability) asset

$
(14,709
)

$
12,097  F-51




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
     December 31,


December 31,2008


2007Current deferred tax assets

$
13,555


$
11,521Non-current deferred tax assets


17,008



25,179Current deferred tax liabilities


(8,339
)


(15,022
)Non-current deferred tax liabilities


(36,933
)


(9,581
)$
(14,709
)

$
12,097            F-52




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
      2008


2007Beginning Balance

$
249,381


$
230,257Increase as result of tax positions taken during the current
    period


51,751



30,446Increase as result of tax positions taken during a prior period


2,328



9,052Decreases as a result of tax positions taken during a prior
    period


(17,533
)


(12,927
)Lapse of applicable statute of limitations


(351
)


(7,447
)Ending Balance

$
285,576


$
249,381            F-53




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
          15.
    Employee
    Benefit Plans  401(k)
    Plan   F-54




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
  Pension
    and Postretirement Benefits          Pension PlansYear Ended December 31,2008


2007


2006Components of net periodic pension costService cost

$
6,335


$
6,613


$
7,166Interest cost


5,898



4,863



4,429Expected return on plan assets


(1,288
)


(998
)


(1,075
)Amortization of loss


25



675



1,026Amortization of prior service cost


737



396



635Curtailment










120Settlement










(365
)Net periodic pension cost

$
11,707


$
11,549


$
11,936Postretirement Medical PlanYear Ended December 31,2008


2007


2006Components of postretirement medical costService cost

$
2,525


$
2,471


$
1,922Interest cost


940



866



735Amortization of losses






51



156Amortization of prior service cost


478



478



478Net periodic postretirement medical cost

$
3,943


$
3,866


$
3,291  F-55




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
  PostretirementMedicalPension Plans


PlanYear Ended


Year EndedDecember 31,


December 31,2008


2007


2008


2007Change in projected benefit obligationBenefit obligation at beginning of year

$
124,021


$
119,159


$
15,429


$
15,073Service cost


6,335



6,612



2,525



2,471Interest cost


5,898



4,863



940



866Plan participants contributions


850



678



283



196Benefits paid


(4,087
)


(2,412
)


(545
)


(270
)Administrative expense


(129
)


(138
)






Actuarial loss (gain)


3,626



(16,854
)


(2,709
)


(2,907
)Effect of exchange rate changes


(4,189
)


12,113







Projected benefit obligation at end of year

$
132,325


$
124,021


$
15,923


$
15,429Change in plan assetsFair value of plan assets at beginning of year

$
26,345


$
22,235


$



$
Actual return on plan assets


(3,151
)


260







Employer contributions


4,603



3,874



262



74Employee contributions


850



678



283



196Benefits paid


(4,087
)


(2,412
)


(545
)


(270
)Administrative expense


(129
)


(138
)






Effect of exchange rate changes


1,501



1,848







Fair value of plan assets at end of year

$
25,932


$
26,345


$



$
Reconciliation of funded statusFunded status

$
(106,393
)

$
(97,676
)

$
(15,923
)

$
(15,429
)Net amount recognized

$
(106,393
)

$
(97,676
)

$
(15,923
)

$
(15,429
)Amounts recognized in Accumulated Other Comprehensive LossPrior service cost

$
2,926


$
3,574


$
1,070


$
1,548Net loss (gain)


3,269



(3,589
)


(3,406
)


(531
)Total accumulated other comprehensive loss (income)

$
6,195


$
(15
)

$
(2,336
)

$
1,017Amounts recognized in the Consolidated Balance SheetsNoncurrent assets

$



$
2,460


$



$
Current liabilities


(2,167
)


(2,172
)


(265
)


(189
)Noncurrent liabilities


(104,226
)


(97,964
)


(15,658
)


(15,240
)Net amount recognized

$
(106,393
)

$
(97,676
)

$
(15,923
)

$
(15,429
)Accumulated benefit obligation

$
117,815


$
110,065


$
15,923


$
15,429    F-56




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
    PostretirementPension Plans


Medical PlanYear Ended


Year EndedDecember 31,


December 31,2008


2007


2008


2007Weighted-average assumptions used to determine benefit
    obligationsDiscount rate


4.9
%


5.1
%


6.1
%


6.1
%Rate of compensation increase


2.1
%


3.0
%






Weighted-average assumptions used to determine net periodic
    benefit costDiscount rate


5.1
%


4.2
%


6.1
%


5.8
%Expected long-term return on plan assets


4.8
%


4.5
%






Rate of compensation increase


3.0
%


3.0
%






      Pension PlanDecember 31,


December 31,2008


2007Asset categoryBonds


51.9
%


51.0
%Equities


26.7



31.0Real estate


14.5



13.0Other


6.9



5.0Total


100.0
%


100.0
%     PostretirementPension Plans


Medical Plan2009

$
3,891


$
2732010


4,161



3712011


4,407



4562012


4,686



5432013


5,008



664Years
    2014-2018


29,479



6,475$
51,632


$
8,782  F-57




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
     December 31,


December 31,2008


2007Health care cost trend rate assumed for next year


9.0
%


9.0
%Rate to which the cost trend rate is assumed to decline (the
    ultimate trend rate)


5.0
%


5.0
%Year that the rate reaches the ultimate trend rate


2017



2016     1%-Point


1%-PointIncrease


DecreaseEffect on total service and interest cost

$
624


$
(515
)Effect on Postretirement Benefit Obligation

$
2,458


$
(2,060
)         Deferred
    Compensation Plan  EITF 97-14,
   F-58




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
    16.
    Lease and
    Facilities Restructuring and Severance Activities  Severance
    Activities    Lease and
    Facilities Restructuring Activities       F-59




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
        TotalBalance at December 31, 2005

$
50,597Charges to operations


29,621Payments


(14,142
)Other (1)


842Balance at December 31, 2006


66,918Charges to operations


20,869Payments


(23,774
)Other (1)


1,671Balance at December 31, 2007


65,684Benefit to operations


(3,524
)Payments


(21,902
)Other (1)


(76
)Balance at December 31, 2008

$
40,182     (1)
    
    Other changes in restructuring
    accrual consist primarily of foreign currency translation
    adjustments.    Year Ending December 31:2009

$
14,9562010


10,8432011


8,2192012


3,5542013


2,094Thereafter


516Total

$
40,182  F-60




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
  17.
    Fair
    Value Measurements  FSP 157-1, FSP 157-2, FSP 157-2
       F-61




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
       Fair Value Measurements at Reporting Date UsingQuoted Prices in


SignificantTotal Fair


Active Markets


Other


SignificantValue of


for Identical


Observable


UnobservableAsset or


Assets


Input


InputsLiability


(Level 1)


(Level 2)


(Level 3)(2)Cash and cash equivalents(1)

$
107,564


$
107,564


$



$
Other current assets(1)


745



745







Other assets


26,369



26,073







296Total assets

$
134,678


$
134,382


$



$
296Other current liabilities(1)

$
2,456


$
2,456Other liabilities(1)


745



745Total liabilities

$
3,201


$
3,201     (1)
    
    The Company has assets held in a
    Rabbi Trust deferred compensation plan, which generally include
    actively traded mutual funds and money market accounts.(2)
    
    The Company carries cost-basis
    investments in privately-held companies. An other than temporary
    impairment in value of $53 and a temporary impairment in value
    of $6 was recorded as part of Other Income in the Consolidated
    Statement of Operations during the year ended December 31,
    2008.  18.
    Segment
    Information   F-62




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
     Year Ended December 31, 2008Public


Commercial


Financial








Latin


Corporate/Services


Services


Services


EMEA


Asia Pacific


America


Other(1)


TotalRevenue

$
1,368,992


$
386,599


$
185,978


$
833,520


$
324,047


$
101,361


$
(3,456
)

$
3,197,041Operating income (loss)


299,490



68,700



35,016



155,928



76,816



14,543



(522,000
)


128,493Depreciation and amortization


6,719



1,053



335



7,757



877



497



28,677



45,915Interest expense(2)


183



55







18,899



9,567



2,344



29,975



61,023Total assets(3)


308,048



65,106



34,762



553,197



125,821



18,779



549,202



1,654,915   Year Ended December 31, 2007Public


Commercial


Financial








Latin


Corporate/Services


Services


Services


EMEA


Asia Pacific


America


Other(1)


TotalRevenue

$
1,432,645


$
509,789


$
264,198


$
791,298


$
362,715


$
90,091


$
4,826


$
3,455,562Operating income (loss)


230,007



58,705



22,896



124,675



69,243



(17,059
)


(721,259
)


(232,792
)Depreciation and amortization


8,648



696



557



11,855



875



450



40,391



63,472Interest expense(2)


25,025



5,638



3,412



7,586



5,476



2,074



12,005



61,216Total assets(3)


396,542



95,003



48,026



594,675



130,109



25,159



691,890



1,981,404   Year Ended December 31, 2006Public


Commercial


Financial








Latin


Corporate/Services


Services


Services


EMEA


Asia Pacific


America


Other(1)


TotalRevenue

$
1,339,358


$
554,806


$
399,331


$
703,083


$
360,001


$
82,319


$
5,105


$
3,444,003Operating income (loss)


234,309



57,229



111,192



96,180



68,205



4,465



(770,849
)


(199,269
)Depreciation and amortization


10,080



1,089



852



10,573



2,795



712



49,467



75,568Interest expense(2)


25,915



6,382



4,715



3,637



9,717



2,836



(16,020
)


37,182Total assets(3)


418,999



113,948



63,342



573,489



124,068



24,714



620,680



1,939,240   (1)
    
    Corporate/Other operating loss is
    principally due to infrastructure and shared services costs,
    such as facilities, information systems, finance and accounting,
    human resources, legal and marketing.(2)
    
    Interest expense is allocated to
    the industry segments based on accounts receivable and unbilled
    revenue.(3)
    
    Industry segment assets include
    accounts receivable, unbilled revenue, certain software and
    property and equipment directly attributed to the industry
    segment, purchased intangible assets and goodwill. All other
    assets are not allocated to industry segments and are classified
    as corporate assets.  Geographic
    Information    Year Ended December 31,2008


2007


2006Property and





Property and





Property andEquipment,





Equipment,





Equipment,Revenue (2)


Net (3)


Revenue(2)


Net (3)


Revenue (2)


Net (3)North America(1)

$
1,941,569


$
83,774


$
2,206,632


$
78,076


$
2,293,495


$
101,270EMEA


833,520



12,783



791,298



17,660



703,083



26,930Asia Pacific


324,047



3,491



362,715



4,738



360,001



4,886Latin America(4)


101,361



2,139



90,091



3,197



82,319



2,314Total outside of North America


1,258,928



18,413



1,244,104



25,595



1,145,403



34,130Corporate/Other


(3,456
)






4,826







5,105



Total

$
3,197,041


$
102,187


$
3,455,562


$
103,671


$
3,444,003


$
135,400  F-63




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
   (1)
    
    The North America region includes
    the Public Services, Commercial Services and Financial Services
    segments. The North America region is comprised of operations in
    the United States and Canada. The Company reports financial
    information for these two countries as one region. The
    Companys operations in Canada do not contribute materially
    to the North America region.(2)
    
    Revenue by geographic region is
    reported based on where client services are supervised.(3)
    
    Property and equipment, net of
    depreciation, related to the geographic region in which the
    assets reside.(4)
    
    The Latin America region includes
    Mexico.  19.
    Results
    by Quarter (unaudited)  Quarterly Periods during the Year EndedDecember 31, 2008December 31,


September 30,


June 30,


March 31,2008


2008


2008


2008Revenue(1)

$
679,310


$
800,987


$
886,724


$
830,020Costs of service:Costs of service(2)(3)(4)(5)


503,903



655,128



678,890



683,333Lease and facilities restructuring charge (credit)


2,774



1,381



(1,627
)


(6,052
)Total costs of service


506,677



656,509



677,263



677,281Gross profit


172,633



144,478



209,461



152,739Selling, general and administrative expenses(2)(3)(4)


127,304



139,915



140,850



142,749Operating income


45,329



4,563



68,611



9,990Interest/other expense, net


(36,774
)


(30,692
)


(8,458
)


(15,887
)Income (loss) before taxes


8,555



(26,129
)


60,153



(5,897
)Income tax expense


5,405



4,364



41,693



17,292Net income (loss)

$
3,150


$
(30,493
)

$
18,460


$
(23,189
)Income (loss) per share  basic

$
0.69


$
(6.81
)

$
4.15


$
(5.21
)Income (loss) per share  diluted

$
0.52


$
(6.81
)

$
4.15


$
(5.21
)    (1)
    
    The Companys revenue in the
    fourth quarter of 2008 was lower than prior quarters in 2008 due
    to an overall decline in billable hours and rate per hour.
    Additionally, the Company recorded several large adjustments to
    reduce revenue during the fourth quarter of 2008 as a result of
    performance issues on certain contracts, and settlements with
    clients regarding contract disputes totaling approximately
    $27,000.(2)
    
    During the fourth quarter of 2008,
    the Company reversed $93,472 of expenses recorded through the
    third quarter of 2008 associated with the PSU plan, comprised of
    $76,039 within costs of service and $17,433 within selling,
    general and administrative expenses, due to the Companys
    estimate that the achievement of the performance condition
    associated with these awards was no longer probable at the end
    of the plan period.(3)
    
    During the fourth quarter of 2008,
    the Company reversed $17,720 of expenses recorded through the
    third quarter of 2008 associated with the PCA plan,
    comprised of $16,269 within costs of service and $1,452 within
    selling, general and administrative expenses, due to the
    Companys estimate that the achievement of the performance
    condition associated with these awards was no longer probable at
    the end of the plan period.

(4)
    
    During the fourth quarter of 2008,
    the Company reversed accruals of $7,721 in connection with our
    global tax equalization policy, comprised of $7,518 within costs
    of service and $203 within selling, general and administrative
    expenses.

(5)
    
    During the fourth quarter of 2008,
    the Company recorded severance expenses of $15,699, comprised of
    $14,893 within costs of service and $806 within selling, general
    and administrative expenses resulting from the Companys
    routine adjustments to the size of its workforce to better meet
    the needs of the business. F-64




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
   Quarterly Periods during the Year EndedDecember 31, 2007December 31,


September 30,


June 30,


March 31,2007


2007


2007


2007Revenue

$
852,067


$
861,897


$
875,346


$
866,252Costs of service:Costs of service


770,192



725,411



731,486



739,079Lease and facilities restructuring charge (credit)


20,561



3,866



1,329



(4,887
)Total costs of service


790,753



729,277



732,815



734,192Gross profit(1)


61,314



132,620



142,531



132,060Selling, general and administrative expenses


189,042



160,324



174,707



177,244Operating loss


(127,728
)


(27,704
)


(32,176
)


(45,184
)Interest/other expense, net


(15,228
)


(19,822
)


(13,626
)


(9,022
)Loss before taxes


(142,956
)


(47,526
)


(45,802
)


(54,206
)Income tax expense(2)


26,028



20,480



18,225



7,500Net loss

$
(168,984
)

$
(68,006
)

$
(64,027
)

$
(61,706
)Loss per share  basic and diluted

$
(38.80
)

$
(15.80
)

$
(14.91
)

$
(14.39
)    (1)
    
    During the fourth quarter of 2007,
    the Company recorded $58,800 in loss reserves and revenue write
    downs in addition to $20,561 in lease and facilities
    restructuring charges which significantly impacted gross profit.(2)
    
    During the fourth quarter of 2007,
    the Company recorded a valuation allowance against previously
    recognized deferred tax assets of $11,867.  20.
    Related
    Party Transactions  AlixPartners    Friedman
    Fleischer & Lowe, LLC /Spencer C. Fleischer   F-65




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
    21.
    Supplemental
    Financial Information    ChargeBalance at


(Benefit) to





Balance atBeginning


Costs and


Deductions-


EndAllowance for Doubtful Accounts

of Period


Expenses (1)


Write Offs


of PeriodYear Ended December 31, 2008

$
5,980


$
(1,343
)

$
(2,350
)

$
2,287Year Ended December 31, 2007


5,927



2,465



(2,412
)


5,980Year Ended December 31, 2006


9,326



(464
)


(2,935
)


5,927   (1)
    
    Expense reflected in other costs of
    service in the Consolidated Financial Statements  Balance at


Charged to


Charged


Credited to


Balance atBeginning


Income Tax


to Other


Income Tax


End ofIncome Tax Valuation Allowance

of Period


Provision


Accounts (2)


Provision


PeriodYear Ended December 31, 2008

$
468,563


$
0


$
(12,189
)

$
(12,722
)

$
443,652Year Ended December 31, 2007


408,149



125,590



(65,176
)






468,563Year Ended December 31, 2006


338,792



76,775



(7,418
)






408,149   (2)
    
    Other accounts include deferred tax
    accounts, currency translation adjustments and amounts related
    to the adoption of FIN 48.  22.
    Subsequent
    Events  Bankruptcy
    Proceedings and Sales Transactions
     F-66




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
           F-67




---



##### Table of Contents



BEARINGPOINT,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (in
    thousands, except share and per share amounts)
    Form 10-K
  Defined
    Benefit Post Retirement Plan
    Impairment
    of Assets
    Legal
    Proceedings
  2005 Class Action Suit. Form 10-K
 F-68